FOMC Minutes Show Fed Members Expect Higher Inflation

On August 20, 2025, Federal Reserve released Minutes of the Federal Open Market Committee. The Minutes showed that Fed members believed that tariff effects were becoming more apparent in the data, as indicated by recent increases in goods price inflation.

Importantly, Fed members expect that inflation will increase in the near term. According to the Minutes, “many participants noted that it could take some time for the full effects of higher tariffs to be felt in consumer goods and services prices.”

Fed members believe that stockpiling of inventories ahead of tariffs and slow pass-through of input cost increases will lead to lags between higher tariffs and higher inflation.

The Minutes showed that Fed believed that domestic businesses and consumers were “predominantly bearing the tariff costs”, while foreign exporters paid a modest part of increased tariffs.

Not surprisingly, Fed members believe that uncertainty about the economic outlook remains elevated and highlight upside risks to inflation.

U.S. Dollar Index made an attempt to rebound from session lows as traders reacted to FOMC Minutes. It remains to be seen whether Minutes provide sufficient support to the American currency as forex traders may stay focused on Trump’s attack on Fed’s Cook.

Gold traded near the $3345 level after the release of FOMC Minutes. Gold traders will likely remain focused on the dynamics of the U.S. dollar.

SP500 pulled back towards the 6375 level as Minutes were more hawkish than expected. Fed members stay focused on tariff-related risks, which means that Fed may decide against a rate cut in September.

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