Fed: Hawkish minutes keep upside rate risks – ING

ING strategists Michiel Tukker and Benjamin Schroeder note that the Federal Reserve’s June minutes confirmed a more hawkish stance despite an unchanged policy rate. They highlight that nine officials pencilled in higher rates by year-end and that most see further policy firming as likely if inflation stays elevated due to AI-driven demand, high energy prices and tariffs, though ING’s base case expects moderation.

June minutes reinforce hawkish Fed stance

"This more upbeat take on the economy and the labour market was also reflected in the more hawkish stance of the Fed, which was just confirmed by the minutes of the June meeting."

"While voting unanimously to keep rates on hold, that meeting saw nine Fed officials pencilling in higher rates by the end of this year."

"Most officials agreed that “some policy firming would likely be warranted” in a scenario in which inflation remained elevated due to strong AI-driven demand, high energy prices and tariffs."

"This is not our base case for inflation, where we see more room for moderation."