Latest Federal Reserve minutes show more support for rate hikes as inflation fears mount

Concern about inflation deepened at the Federal Reserve’s meeting last month, with “several” policymakers ready to raise interest rates and “many” saying a hike in borrowing costs would be needed if inflation does not decline to the central bank’s 2% target, the minutes of the session showed on Wednesday.The policymakers who favored a rate increase at the meeting “remarked that price pressures appeared broad-based and judged that the (policy-setting) Committee should adopt a more restrictive policy stance to meet its commitment to achieving its price-stability and maximum employment goals on a sustained basis,” the minutes of the July 28-29 meeting said.Failure to do so, they argued, would risk “a steeper and potentially more costly sequence of tightening moves at a later stage.”The Fed voted at that meeting to hold its benchmark interest rate in the current 3.50%-3.75% range, but with three policymakers dissenting in favor of a quarter-percentage point hike.A larger group of “many” participants “assessed that policy tightening would likely be necessary if inflation did not decline,” the minutes said.The minutes, covering Fed Chairman Kevin Warsh’s second meeting as head of the central bank, showed central bankers already delving into some of the broader issues he wants to pursue as part of a possible overhaul of how the Fed operates.Participants saw an upcoming task force review of how the Fed manages its balance sheet as an “opportunity for a comprehensive discussion,” though “many” participants at the meeting “reaffirmed that the primary means of adjusting the stance of monetary policy should be through changes in the target range for the federal funds rate,” not manipulating the Fed’s asset holdings.Warsh also asked for “input from the Committee” on whether it would be better for the Fed to hold only six meetings a year rather than the current eight, allowing for a full two months of data to accumul...