“Most participants” at 2026’s first FOMC meeting judged that inflation in the US is still on track to recede back to the Fed’s target, particularly given the “ongoing moderation in inflation for housing services” and expectations for “higher productivity growth associated with technological or regulatory developments.”

That’s according to minutes from the January meeting released on Wednesday afternoon in the US. It sounds as though Fed officials generally buy some version of the narrative that says AI and deregulation, between them, may help monetary policy run the proverbial “last mile” in the fight to restore inflation to 2%.

Indeed, “a few” policymakers said they’ve heard from their business contacts that more companies are “automating operations” to help offset cost pressures, which in turn “reduce[s] the need to pass those increases on to consumer prices or to reduce margins.”

That’s great, except… well, you need a job if you’re going to buy things in the economy. If you get replaced by a robot, thereby losing your paycheck, it won’t matter that price growth’s no longer onerous. There’s thus something a bit absurd, or at least circular, about an argument that says automation will help keep prices in check to the benefit of consumers.

What are workers when they aren’t working? They’re consumers. If they lose their jobs to automation, their capacity to consume will be constrained. It’ll be small comfort that the robot “who” replaced them obviated the need for price hikes.

In any case, “most” Committee members still judged that restoring inflation to 2% sustainably will prove challenging and some continued to warn that “the risk of inflation running persistently above the Committee’s objective was meaningful.”

Automation or not, some business leaders told their local Fed official they expect to raise prices in 2026 given persistent upward pressure on input costs, “including those related to tariffs.” Further, “several” policymakers cautioned that continuing to run the economy hot raises the odds that “sustained demand pressures could keep inflation elevated.”

Recall that the January statement reflected a more balanced assessment of the risks around the dual mandate. The Committee’s no longer inclined, after 175bps of rate cuts since September of 2024 and with inflation still running above target, to reduce rates substantially further absent conclusive evidence that the labor market’s rolling over. And January’s jobs report suggested the opposite — hiring’s re-accelerating, or at least according to the BLS.

With that in mind — and yes, I’ve thoroughly buried the lede as is my wont — the key passage from Wednesday’s FOMC minutes was undoubtedly this sentence:

Several participants indicated that they would have supported a two-sided description of the committee’s future interest-rate decisions, reflecting the possibility that upward adjustments to the target range for the federal funds rate could be appropriate if inflation remains at above-target levels.

That’s pretty remarkable. It means more than a few policymakers wanted to include — or were at least open to including — an allusion to potential rate hikes looking ahead in the event inflation proves stubborn.

I suppose it doesn’t matter now, though. This is Donald Trump’s Fed beginning in June. And a Trump Fed isn’t going to be hiking rates.