Much to the chagrin of Donald Trump’s new Fed chair, who’d prefer it if macro conditions were more conducive to the rate cuts he swears he didn’t promise to deliver, minutes from the June FOMC meeting were riddled with references to upside inflation risk.

That’s hardly surprising. After all, consumer prices are rising at the briskest pace in three years, and thanks in no small part to record-high stock prices, well-to-do households have both the will and the wherewithal to keep the party going.

Throw in robust business spending attributable to the AI buildout, and you’ve got yourself a recipe for an overheat, notwithstanding the downshift in hiring flagged by an underwhelming June jobs report.

In an effort to better convey the pervasiveness of inflation worries among FOMC members, I’m presenting key passages from Wednesday’s meeting minutes in bullet-point format. To wit:

• Participants generally noted that inflation had increased further and remained well above the Committee’s 2% longer-run objective.
• They observed that both core and total inflation had moved higher and generally attributed these increases to the lingering effects of tariffs, supply chain disruptions related to the closure of the Strait of Hormuz, and strength in demand for some goods and services stemming from robust AI-related investment.
• Several participants commented that price pressures had become more broad based, with a large share of goods and services — including transportation, airfares, petrochemical products and agricultural inputs — experiencing substantial increases.
• Several participants remarked that services price inflation excluding housing had declined little and remained high.
• Participants judged that the risks to the inflation outlook were still tilted to the upside.
• Many participants noted that elevated commodity prices and supply disruptions could persist longer than currently anticipated.
• Several participants reported that their business contacts were facing notable cost pressures.
• Some participants observed that the sharp rise in input costs reported in business surveys raised concerns about the potential for higher energy and commodity costs to pass through more broadly to final goods prices.
• Many participants noted that ongoing strong demand for AI infrastructure would likely sustain upward pressure on prices for technology products and electricity.
• Most participants remarked that growth in economic activity that exceeded that of potential output, owing in part to strong AI business investment, could contribute to more persistent inflationary pressures.

Suffice to say this is a Committee that’s concerned about rekindled inflation and not inclined to cut rates barring convincing evidence that the situation’s improving.

The minutes contained a passing reference to the possibility that AI will eventually usher in structural disinflation, but that view was voiced only by “some” participants who anyway emphasized that “this effect would likely take time to materialize.”

Without wanting to belabor the point, the account of the June proceedings felt overtly cautious and to me read as the most circumspect set of meeting minutes since 2022.

Although Fed officials still viewed medium- and long-term inflation expectations as reasonably well-anchored, a “majority” of participants fretted that if price growth stays elevated for much longer, households and businesses could “begin” to adopt an inflationary mindset.

There’s “considerable uncertainty” around the inflation outlook and policymakers “stressed the importance of closely monitoring inflation developments.”

The minutes contained a fairly lengthy account of policymakers’ views on AI capex, which has “showed no signs of slowing.” Those investments, Fed officials reckoned, will eventually “increase potential output,” but there’s “considerable uncertainty” around both the timeline and the magnitude of any potential productivity gains.

For now, relatively easy financial conditions are “supporting demand,” according to some policymakers who “pointed specifically to high equity prices driven by strong corporate earnings and AI optimism.”

I suppose you could read into the June minutes a dovish intonation via a passage which noted that “most participants” can at least envision “scenarios in which inflationary pressures dissipate” and price growth converges quickly to 2%, in which case it’d be “appropriate to maintain or eventually lower” rates. But… well, just because I can envision buying a Ferrari in September doesn’t mean it’s going to happen.

Besides, “most participants” also sketched the contours of scenarios in which “inflation would remain elevated due to strong AI-related demand, the conflict in the Mideast or the effects of tariffs.” In those scenarios, officials said they’d probably support raising rates.

Oh, and if you were wondering whether anyone floated the idea of a hike at Warsh’s first meeting as chair, the answer’s “sorta.”

“A few participants,” the minutes said, “commented that there was a case for raising the target range” in June. Ultimately, those officials were persuaded to support keeping rates unchanged. For now anyway.

The minutes were released in the long shadow of escalatory rhetoric from Trump, who said the ceasefire with Iran’s “off” and warned the US military intends to strike the country for a second day on Thursday.