Overview

• FOMC minutes from the May 6–7 meeting reveal sharp disagreements over whether Trump’s higher import levies will cause lasting inflation or have only limited price effects.
• All participants backed maintaining the federal funds rate at 4.25%–4.50%, citing an unclear economic outlook and rising risks of both inflation and unemployment.
• Fed staff cautioned that a recession is almost as probable as their baseline forecast for slow growth and that tariffs may boost inflation markedly this year and into 2026.
• Traders priced in a 97.8% chance of no change at the June 18 meeting, according to the CME FedWatch Tool.
• Officials indicated the flexible average inflation-target framework may need revision to address heightened risks of large price shocks.