WASHINGTON, Aug 21, 2025 (BSS/AFP) - A majority of Federal Reserve 
officials found that risks surrounding US inflation outweighed those to 
employment, minutes of a recent policy meeting showed -- underscoring a 
central bank divide over the effects of President Donald Trump's tariffs.

Attendees of the late July meeting saw challenges to both sides of the Fed's 
dual mandate of maintaining stable prices and maximum employment, as they 
mulled the right time for changes to interest rates, according to the minutes 
released Wednesday.

But "a majority of participants judged the upside risk to inflation as the 
greater of these two," the report added.

Only "a couple of participants considered downside risk to employment the 
more salient" one.

This points to differences in the central bank's rate-setting Federal Open 
Market Committee, which saw two dissents in July from Fed governors 
Christopher Waller and Michelle Bowman.

Overall, policymakers voted to keep interest rates unchanged at a range 
between 4.25 percent and 4.50 percent, despite Trump's repeated calls for the 
independent central bank to slash rates.

But Waller and Bowman favored a cut of 25 basis points, with Bowman flagging 
a preference to hedge against further weakening in the economy and "the risk 
of damage to the labor market."

The minutes showed Wednesday that a couple of officials preferred to lower 
interest rates, indicating that the two dissenters appear not to have been 
joined by others.

These policymakers judged that tariffs were unlikely to have persistent 
effects on price hikes, while flagging concern on labor market conditions.

Elsewhere, officials gauged that growth of economic activity cooled in the 
first half of this year, the minutes said.

Tariff effects "were becoming more apparent in the data, as indicated by 
recent increases in goods price inflation," the minutes showed.

Several participants also noted that inflation exceeded the Fed's two-percent 
target for a prolonged period. This raises the risk of longer-term inflation 
expectations "becoming unanchored," particularly if higher tariffs have 
lingering effects on prices.

Many in the meeting also noted it could take time for the full effects of 
steeper duties to be felt in consumer costs.

"The labor market will be the swing factor on whether the Fed cuts interest 
rates in September or not," said economist Ryan Sweet of Oxford Economics.

"It's likely the August employment report and revisions will be the 
determining factor," he added.

"Odds are rising that the Fed cuts sooner than we anticipate."