Federal Reserve meeting minutes: A more neutral policy stance helps avoid a major deterioration in the labor market.

The Federal Reserve meeting minutes noted that, in discussing risk management factors that could influence the outlook for monetary policy, participants generally agreed that upside risks to inflation remained high, while downside risks to employment were also high and had increased since mid-2025. Most participants noted that a shift to a more neutral policy stance would help prevent a significant deterioration in labor market conditions. Many of these participants also believed that existing evidence suggested a reduced likelihood of tariffs causing persistent inflationary pressures. In contrast, some participants noted that upside risks to inflation could be deeply entrenched and argued that further cuts to policy rates, given persistently high inflation data, could be misinterpreted as a weakening commitment by policymakers to the 2% inflation target.