Dorothy

"Many participants assessed that policy tightening would likely be necessary if inflation did not decline," stated the summary of the meeting, held July 28-29. "Some participants commented that financial conditions might not currently be sufficiently restrictive to facilitate a return of inflation to 2 percent."

Treasury yields are on the march with some analysts suggesting Fed chairman Kevin Warsh is being “tested” by the bond market. But those who know the boomerang central banker well told Fortune that while Warsh will note market “teething” problems, a reaction shouldn’t be expected.

New Fed chair Kevin Warsh also unnerved Wall Street investors last month by providing little guidance at a July 29 news conference on what the Fed’s next steps might be, threatening the Fed’s inflation-fighting credibility. Interest rates, or yields, on longer-term Treasury securities, which had already risen before the meeting, moved higher.

Also at the meeting, the board discussed "an intermeeting incident involving a disruption to transaction settlements." The minutes noted that the Fed's policy of maintaining "ample" bank reserves "helped maintain the orderly functioning of money markets in the face of this disruption."

“Most participants anticipated that inflation would step down over the rest of the year as the effects of tariffs and earlier energy price increases wane, but many participants noted the possibility that inflation might be more persistently elevated,” according to the meeting summary.

As we already knew: Most participants assessed higher rates would likely be necessary if inflation did not fall

Since rejoining the central bank in June, Chairman Kevin Warsh has concentrated on reforming Fed communications. One of these potential changes could be the number of meetings per year.

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 accumulate each time. No decisions were made regarding this issue, the minutes said, and the 2026 schedule of meetings would not be altered.

The minutes of the July 28-29 meeting, released Wednesday, don’t provide specifics on how many of the 19 officials supported higher rates. Only 12 of the 19 policymakers vote on the outcome. Officials voted 9-3 at the meeting to keep their key rate unchanged at about 3.6%.

Warsh’s defenders point out that he has been clear in his intention to bring inflation to heel at 2%. At his first post-FOMC conference in June, Warsh stated: “I’ve said for years inflation is a choice. You bet it is. And today I’m announcing that this Committee, unambiguously and unanimously, have decided we are going to deliver on that.”