By Nicole Goodkind
A majority of Federal Reserve officials said at their April meeting that interest-rate increases will likely be appropriate if inflation continues to run above the central bank's target, according to minutes released Wednesday.
The notes from the last Fed meeting chaired by Jerome Powell are the clearest sign yet of what his successor, Kevin Warsh, is walking into.
Warsh is set to be sworn in Friday at a White House ceremony. The incoming chair has spoken out in favor of rate cuts -- putting him at potential odds with a committee that is now seriously entertaining the opposite.
Last month's meeting minutes offer the fullest account to date of how officials are weighing an inflation problem that has grown harder to dismiss, as price growth has remained above the central bank's 2% goal for five years.
Three regional Fed presidents objected to the statement language at the April meeting, pushing to remove wording that signaled the central bank still leaned toward lowering interest rates. They were outvoted, but Powell acknowledged at the news conference that their position could command a majority as soon as June.
Wednesday's minutes indicate that even more officials supported the dissenters because of lingering inflation risks, as the Iran war pushes up oil and other goods prices in the near-term. Almost all policymakers worried that conflict in the Middle East could persist for an extended period and that commodities prices could remain elevated even after the fighting ended.
Several officials also noted that strong inflation rates could soon begin to affect wages.
Employment rates, meanwhile, have remained relatively stable and presented less of a threat to the economy. "Most participants judged that recent data, such as readings on the unemployment rate, layoffs, hiring, and labor force growth, suggested stabilization in the labor market," the meeting minutes read.
Because of that, "many participants indicated that they would have preferred removing the language from the postmeeting statement that suggested an easing bias regarding the likely direction of the Committee's future interest rate decisions," according to the minutes.
Since the meeting, markets have priced in a growing chance of at least one interest-rate hike by year's end, a significant shift from earlier this year.
Warsh will need to decide quickly whether to try to redirect the hawkish consensus forming around him, or let the debate play out while he finds his footing. Any signal he sends in his first weeks, whether in speeches or at the June rate-setting meeting, will be parsed closely by both Wall Street and the Beltway.
"Rate hikes are back on the table. Policymakers think the labor market is stable, and a vast majority see more inflation risk," wrote David Russell, head of market strategy at TradeStation. "They're also worried about tariffs and embedded price pressures. The committee is getting more hawkish as Kevin Warsh joins."
Write to Nicole Goodkind at nicole.goodkind@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
May 20, 2026 15:55 ET (19:55 GMT)
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