“Participants generally pointed to risks to both sides of the Committee’s dual mandate, emphasizing upside risk to inflation and downside risk to employment,” the minutes said. While most members judged inflation the greater concern, a few warned that job losses could become more pressing.
Economic uncertainty
Fed staff described growth as “tepid” during the first half of the year, even as the unemployment rate remained low. Still, several participants saw signs of weakening momentum.
“Downside risk to employment had meaningfully increased with the slowing of the growth of economic activity and consumer spending, and some incoming data pointed to a weakening of labor market conditions,” the summary noted.
Two days after the meeting, the Bureau of Labor Statistics reported that payroll growth in July was weak and prior months’ gains were revised sharply lower, underscoring officials’ concerns.
Tariffs as a key factor
Another major focus was the impact of trade policy. The Fed noted “considerable uncertainty” about the inflationary effects of tariffs imposed earlier this year by president Donald Trump.