Skip to navigationSkip to main contentSkip to right columnADVERTISEMENTMary Helen GillespieThu, July 9, 2026 at 4:17 PM GMT+2 4 min readThe Iran War, tariffs and the demand-driven AI-investment boon could add up to create inflationary conditions where Federal Reserve policymakers would need to consider interest-rate hikes later this year.But not just yet. According to the minutes of the June Federal Open Market Committee meeting, policymakers at the central bank were concerned about high inflation but needed more data before making a move on the benchmark Federal Funds Rate.The data could also signal that rates should continue to hold for a while or even go lower sooner than many expected.The minutes do not name participants so Fed watchers need to closely read the words in the 15-page document released July 8 as well as read between its lines.LPL Financial Chief Economist Jeffrey Roach said the minutes suggest the FOMC had a "good family fight" over the various scenarios under review -- a difficult situation with a wide range of outcomes. "One thing is certain: future policy is heavily contingent on the political situation in the Middle East. If we can tease out any forward guidance from the minutes, it would be the committee is working through a wide range of scenarios and will not commit to a specific scenario until the incoming data provides necessary clarity,'' he said.Roach added that he didn't expect the FOMC to make a change in either direction at the July 28-29 meeting.Fed's dual mandate requires a tricky danceThe Fed's dual mandate from Congress requires maximum employment and stable prices.Lower interest rates support hiring but can fuel inflation. This risks fueling further inflation, potentially leading to an inflationary spiral.Higher rates cool prices but can weaken the job market. This increases the cost of borrowing and further stifles economic activity.Fed holds interest rates steady thus far this year The rate-setting Federal Open Market Committee voted unanimously last month to hold its benchmark Federal Funds Rate target in a range of 3.5% to 3.75%. Policymakers had cut rates by 25 basis points at its last three meetings of 2025 to shore up the softening labor market. These "insurance" cuts stopped after the majority of policymakers decided the risk from higher prices was outweighing signs that the jobs market was stabilizing.The funds rate is the interest rate that the Federal Reserve charges other banks overnight. A change in the funds rate triggers moves in borrowing costs ranging from credit cards to auto loans and influences long-term mortgage rates.It is one of several tools the Fed could use to maintain a balanced economy that is neither overheating nor cooling down.Terms and Privacy PolicyEU DSA contactPrivacy & Cookie SettingsMore Info