Behind closed doors, Fed officials have been warning they may have to raise borrowing costs to wrestle inflation down to the Fed's goal of a 2% annual rate.

Support For Rate Hikes Is Gaining Steam On Fed's Policy Committee

Diccon Hyatt

Full Bio Diccon Hyatt is an experienced financial and economics reporter. He's written hundreds of articles breaking down complex financial topics in plain language, emphasizing the impact that economic currents would have on individuals' finances and the market. He has a Bachelor's degree in English from the University of Delaware.

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Published May 20, 2026

03:31 PM EDT

Jerome Powell, chairman of the US Federal Reserve, departs following a news conference following a Federal Open Market Committee (FOMC) meeting in Washington, DC, US, on Wednesday, April 29, 2026.

The minutes released Wednesday were of the last meeting where Jerome Powell served as chair. Daniel Heuer / Bloomberg via Getty Images

Key Takeaways

"A majority" of the Fed's monetary policy committee at its most recent meeting said the Fed would have to raise interest rates if inflation persists above the central bank's 2% goal.
The Fed is attempting to wrangle inflation that's been over 2% since 2021 and has recently been exacerbated by the Iran war, which has pushed up gasoline prices.

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The nation's central bankers are losing patience waiting for inflation to fall on its own.

Behind closed doors as in public, Fed officials have been warning they may have to raise borrowing costs to wrestle inflation down to the Fed's goal of a 2% annual rate, according to minutes released Wednesday of the Fed's most recent meeting last month.1

"A majority of participants" said "some policy firming would likely become appropriate if inflation were to continue to run persistently above 2%," the minutes showed.

What This Means For The Economy

Higher interest rates could put downward pressure on inflation, with the tradeoff of potentially damaging the job market and economic growth in the short run. Balancing those two concerns is the major challenge of the Fed's monetary policy.

The minutes highlighted the growing pressure the central bank faces as incoming Fed Chair Kevin Warsh takes over. The Fed is responsible for fulfilling a dual mandate from Congress: keeping inflation low and employment high.

Lately, the Fed has been losing its battle against inflation, which jumped to a three-year high in April. The Iran war has pushed up gasoline prices, on the heels of tariffs that have raised prices for many consumer products. Inflation has not run under the 2% goal since 2021.

Related Education

[Federal Open Market Committee (FOMC): What It Is and Does

Federal Open Market Committee (FOMC): The branch of the Federal Reserve System that determines the direction of monetary policy. ](https://www.investopedia.com/terms/f/fomc.asp) [Inflation: What It Is and How to Control Inflation Rates

](https://www.investopedia.com/terms/i/inflation.asp)

The minutes shed light on the Fed's most recent meeting, in which the committee voted to hold rates steady. One official dissented from that decision, favoring a rate cut, while three others said the FOMC should have removed language from its post-meeting statement suggesting the central bank's next move would likely be a rate cut.

The fed funds rate influences borrowing costs across all kinds of loans, and the Fed's inflation-fighting playbook calls for raising it if inflation gets too high for too long to discourage borrowing and spending.

Recently, Fed officials have been torn between the need to keep rates higher for longer to combat inflation and to lower them to stabilize the labor market, which suffered from slow job growth last year as tariff-related uncertainty discouraged employers from hiring. The minutes showed inflation is emerging as the top concern, since recent reports on the job market have shown the unemployment rate falling despite low job creation, suggesting the job market has stabilized.

The growing appetite for rate hikes could put the central bank at odds with President Donald Trump, who has demanded rate cuts to boost the economy and lower the interest the U.S. government pays on the national debt. Trump and his administration put outgoing Fed Chair Jerome Powell under pressure to cut rates, but he resisted and insisted on the central bank's independence from direct White House control. Warsh, whom Trump handpicked for the top banker job, has not recently said what he thinks the Fed's next interest rate move should be.

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Federal Reserve. "Minutes of the Federal Open Market Committee."

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