The release of the Federal Reserve’s June meeting minutes on Wednesday, combined with President Donald Trump’s declaration that the interim ceasefire with Iran was “over”, pushed market-implied odds of a US interest-rate rise by September to nearly 70 per cent. The minutes showed that while the Federal Open Market Committee voted unanimously to hold the federal funds rate at 3.5–3.75 per cent, a “few” officials saw a case for an immediate increase, and the committee removed the easing bias that had previously signalled a tilt towards cuts. Brent crude briefly climbed back above $80 a barrel, and the Dow Jones Industrial Average dropped 570 points.

The minutes detailed a central bank wrestling with competing scenarios. “Many” participants assessed that rates would be at or slightly below the current range by year-end, while “many other” participants judged they would need to be higher. The staff’s baseline projection sees inflation returning to the 2 per cent target only in 2028. The debate turned on whether the inflation pressures from the artificial-intelligence buildout, the Middle East conflict and the lingering effects of tariffs would prove transitory. In a scenario where those forces kept inflation elevated, “almost all” participants indicated that some policy firming would be required. The preferred inflation gauge, the personal consumption expenditures index, rose to 4.1 per cent in May, with the core measure at 3.4 per cent.

Viewed from Washington, the minutes underscore the political tension surrounding new chair Kevin Warsh. Appointed by Trump, who has repeatedly demanded lower borrowing costs, Warsh declined to submit a rate forecast and used his first press conference to stress the primacy of the inflation mandate, barely mentioning the employment goal. He has also moved to shorten the post-meeting statement and curb forward guidance, a shift that, analysts in London note, makes the minutes a more important signal of the committee’s thinking. The document confirmed that a majority of participants favoured shortening the statement, and Warsh has announced five internal task forces to review the Fed’s operations.

The next factual milestones fall on 14 July, when June consumer-price data is released and Warsh testifies before the House Financial Services Committee. The FOMC’s subsequent rate decision is scheduled for 28–29 July. Market attention will focus on whether the inflation data and the renewed hostilities in the Strait of Hormuz harden the committee’s hawkish tilt.