Federal Reserve Minutes Expose a Sharp Divide Over Tariffs and Interest Rates

9 July 2025

Britt Leckman | Credit: Official Federal Reserve Photo

The minutes from the Federal Reserve’s June 17–18 meeting, published on July 9, paint a vivid portrait of internal discord as policymakers wrestle with the economic consequences of rising U.S. import tariffs. Indeed, Fed Governor Christopher Waller and Vice Chair Michelle Bowman both appointed by former President Trump have indicated a willingness to cut rates as early as the upcoming July meeting, citing concerns about trade policy dragging on economic growth. Meanwhile, a cautious bloc within the committee insists on waiting for firmer inflation readings, given that price growth remains elevated at around 3.4 percent, well above the Fed’s 2 percent target.

The breakdown of opinions among voting officials reveals a near-even split: nine anticipate one or no rate cuts in 2025, eight foresee two cuts, and two even project three reductions within the year. This schism reflects broader uncertainty over whether recent tariff measures such as the proposed 50 percent levy on copper and potential duties on semiconductors and pharmaceuticals will trigger persistent inflation or merely provoke a temporary price spike.

Markets have largely shrugged off the tariff shocks so far, with U.S. equity benchmarks holding near all-time highs, Treasury yields edging higher, the dollar firming up, and gold prices slipping to weekly lows. Analysts say investors are treating the tariffs as negotiation tactics rather than actual economic threats, but also warn that continued escalation could eventually unsettle markets .

Looking ahead, the next round of inflation, employment, and consumer confidence data due this summer will be pivotal in shifting Fed strategy. Traders have almost ruled out a July cut, but reckon with a 63% chance of easing by September