Minutes show some wanted to raise rates

Some Federal Reserve officials pushed to raise the Fed’s key interest rate by one-quarter of a percentage point at their meeting last month to intensify their fight against high inflation, though the central bank ultimately decided to forgo a rate hike.

In a sign of growing division among the policymakers, some officials favored a quarter-point increase or said they “could have supported such a proposal,” according to the minutes of the June 13-14 meeting released Wednesday. In the end, the 11 voting members of the Fed’s interest-rate setting committee agreed unanimously to skip a hike after 10 straight increases. But they signaled that they might raise rates twice more this year, beginning as soon as this month.

In Fed parlance, “some” is less than “most” or “many,” evidence that the support for another rate hike was a minority view. And some who held that view were likely unable to vote at the meeting; the 18 members of the Fed’s policymaking committee vote on a rotating basis.

Though last month’s vote to keep rates unchanged was unanimous, it is relatively uncommon for the central bank to stipulate in the minutes of Fed meetings that some officials had disagreed with the committee’s decision.

Twelve of the 18 members of the rate-setting committee projected at least two more rate hikes this year, according to the members’ projections released last month. Four envisioned one more increase. Just two officials foresaw keeping rates unchanged.

The officials who had favored a rate hike last month said that “there were few clear signs that inflation was on a path to return” to the Fed’s 2% objective anytime soon. The decision to forgo an increase left the Fed’s key rate at about 5.1%, the highest level in 16 years.

At the same time, a majority

of officials signaled that they expect to raise rates twice more this year — once more than had previously been expected. In their quarterly economic projections, the policymakers also forecast higher inflation and modestly stronger growth than they had envisioned in June. Those upward revisions are a sign that the economy has been more resilient than Fed officials have expected.

The Fed’s aggressive streak of rate hikes have made mortgages, auto loans, credit cards and business borrowing increasingly expensive.