Federal Reserve officials expressed resolve to bringing inflation closer to their 2% target at the July meeting, with policymakers forecasting more 'significant' rate hikes.
But policymakers expressed concern in July that inflation could become entrenched if consumers think the Fed is wavering.
"Participants judged that a significant risk facing the Committee was that elevated inflation could become entrenched if the public began to question the Committee’s resolve to adjust the stance of policy sufficiently," the minutes said. "If this risk materialized, it would complicate the task of returning inflation to 2 percent and could raise substantially the economic costs of doing so.
Stronger-than-expected data, including solid retail sales reported on Wednesday morning and a blowout July jobs report, could make the case for another mega-sized rate hike next month. "The Fed minutes once again show that controlling inflation is its top priority," said Chris Larkin, managing director of trading at E*Trade. "While it may not be as dovish as some investors hoped to see, there are indications that a slowdown in hikes is in the not-so-distant future.
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