(Yahoo! Finance) - Fed officials are looking at holding rates longer than thought, while also considering rate hikes if inflation remains sticky, according to minutes from the central bank’s April policy meeting released Wednesday.
“Participants generally judged that the continued elevated inflation readings together with uncertainty related to the duration and economic implications of the Middle East conflict could necessitate maintaining the current policy stance for longer than previously anticipated,” the minutes read.
Several Fed members thought they could still lower rates once there are clear indications that inflation is firmly back on track or if solid signs emerge of greater weakness in the job market.
But a majority highlighted that “some policy firming” — Fed speak for rate hikes — would likely become appropriate if inflation were to continue to run persistently above the Fed’s 2% goal.
According to the minutes, many officials would have preferred removing the language from the policy statement that suggested the next move for interest rates is down.
Indeed, three Fed officials — Minneapolis Fed president Neel Kashkari, Dallas Fed president Lorie Logan, and Cleveland Fed president Beth Hammack — all dissented because they wanted to change the language to signal to the public and markets that the next move could be up or down, depending on how the economy and inflation play out.
Several members indicated that, if the war is resolved soon, rate cuts would be warranted later this year if the effects of higher tariffs and energy prices on inflation dissipate. Still, some expressed concerns about a scenario where sustained elevated energy prices combined with tariffs could lead to broader inflation, potentially increasing inflation expectations and creating a tougher tradeoff between the Fed’s goals of maintaining maximum employment and stable prices.
Several members anticipated that higher productivity growth would put downward pressure on inflation, and some observed that price pressures associated with strong AI investment expenditures would likely raise input costs for a range of industries.
There was also an acknowledgment that, after several years of inflation above 2%, elevated inflation could begin to have an increased effect on wage and price-setting decisions.
Almost all participants noted that the risk of the conflict in the Middle East persisting, or of oil and other commodity prices remaining elevated even after the conflict ends, was high.
In their discussion of financial stability, several members noted that asset valuations remain elevated, which heightened the possibility of sharp corrections.
By Jennifer Schonberger - Senior Reporter
May 20, 2026
