Fed Officials See Persistent Inflation as a Threat, Even as Staff Warn of Recession

Central bankers agree to take a cautious approach until the net economic effects of trade policy are clearer

by Greg Robb
Market Watch

Federal Reserve officials were worried about the possibility that higher inflation resulting from the White House trade policy might lead to lasting higher inflation, even as central bank staff were noting that recession odds were high, according to the minutes of the Fed’s May 6-7 meeting, published Wednesday.

The risks of higher inflation and slow growth led Fed officials to back a cautious approach to interest rates. For the third straight meeting, they voted to keep the benchmark interest rate stable in a range of 4.25% to 4.5%.

“Participants agreed that uncertainty about the economic outlook had increased further, making it appropriate to take a cautious approach until the net economic effects of the array of changes to government policies become clearer,” the minutes read.

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