According to the minutes from the Federal Reserve’s July 28 and 29 meeting, several officials supported a 25 basis point rate increase and many warned that further tightening could be necessary if inflation failed to decline. The Federal Open Market Committee ultimately voted to keep the federal funds rate at 3.5% to 3.75%, with three members dissenting in favor of an increase. Inflation risks remained tilted to the upside, with officials pointing to the Middle East conflict, tariffs, energy prices, and AI buildout demand as sources of price pressure. Some participants also raised concerns about financial risks tied to the rapid expansion of AI infrastructure, including the potential for a significant reassessment of AI companies’ earnings prospects. As of press time, markets priced in a 34.4% probability of a rate increase at the Fed’s next policy meeting on September 15 and 16.
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