US Fed members disagreed over whether to raise rates, minutes show

The FOMC decision to raise rates lifted the Fed's benchmark lending rate to a range between 5.25-5.5 percent, its highest level since 2001. (Image: Federal Reserve Headquarters)

A couple of Federal Reserve officials would have backed pausing US interest rate hikes last month, but ultimately supported another increase to tackle high inflation, according to minutes of the meeting published Wednesday.

The July gathering saw all 11 voting members of the policy-setting Federal Open Market Committee (FOMC) support lifting rates by 25 basis points, as inflation remains stubbornly above the central bank's long-term two percent target.

At the same meeting, "most participants" continued to see significant risks that price increases would persist, and this could require further tightening of monetary policy, the minutes showed.

The FOMC decision to raise rates lifted the Fed's benchmark lending rate to a range between 5.25-5.5 percent, its highest level since 2001.

"A couple of participants indicated that they favored leaving the target range for the federal funds rate unchanged or that they could have supported such a proposal," said the latest report.

They judged that maintaining the interest rates level would still "likely result in further progress" towards policymakers' goals while allowing time to evaluate outcomes.

Since the last Fed decision, several FOMC members have voiced sharply different views on the likelihood of further rate hikes, highlighting the divisions that now exist in the most senior ranks of the US central bank.

Fed Governor Michelle Bowman said recently that she expected "additional rate increases will likely be needed to get inflation on a path down to the FOMC's two percent target."

But Philadelphia Fed president Patrick Harker took a different view, telling a conference in early August that, barring any "alarming" new data, "we may be at the point where we can be patient and hold rates steady and let the monetary policy actions we have taken do their work."

Futures traders assign a probability of close to 90 percent that the Fed will vote to hold rates steady at the next meeting on September 19-20, according to data from CME Group.

Should officials wish to nudge markets in a different direction, they may take advantage of a planned speech by Chair Jerome Powell at the Fed's annual Jackson Hole Economic Symposium in Wyoming later this month.