Fed spokesperson: Only two officials supported a rate cut in July, and a few officials hinted they may join the rate cut camp in September.

According to the minutes of the Fed's policy meeting released early Thursday morning Beijing time, the decision made by the Fed last month to keep interest rates unchanged still received broad support, despite two officials opposing it and advocating for a rate cut.

The minutes of the meeting indicate that "almost all" officials supported the decision, meaning that aside from the two opposing officials, the remaining 16 participating officials expressed their support.

This decision was made after the White House exerted strong political pressure on Fed Chairman Powell to cut interest rates. Officials decided to keep the benchmark policy rate in the range of 4.25% to 4.5% after weighing how importers, retailers, and consumers would share the burden of rising import tariffs.

The meeting minutes will be released three weeks after the meeting, as usual, which show that officials have differing views on when they can be certain that rising import costs will not trigger broader and sustained price increases. Some officials stated that "a lot of information will be available in the coming months," while others believe that "it is neither realistic nor appropriate to adjust the monetary policy stance until the impact of tariffs on inflation is fully understood."

At the meeting, officials expressed concern that the employment situation could deteriorate, but most believe that the risk of rising inflation is "the greater of the two risks."

Since that meeting, economic data has further strengthened the so-called "dovish" view, which advocates for interest rate cuts due to the downward revision of employment growth data for May and June. Different interpretations of the economic data have exacerbated the divisions among rate setters in the following weeks.

Last month, Fed governors Waller and Bowman, who voted against holding steady, believe that officials should not make decisions based on price increases caused by tariffs, as such price increases are unlikely to occur again.

A few officials have expressed support for Waller and Bowman’s stance, suggesting that they may lean towards an interest rate cut at the Fed's next meeting on September 16-17. They pointed out that the pass-through speed of tariff increases to consumer prices is lower than expected, which should alleviate market concerns about a new round of inflation shocks caused by rising import costs.

However, hawkish individuals focused on inflation pointed out that price pressures have intensified since last month's meeting, including in the services sector. Kansas City Fed President Esther George stated in a speech last week that the impact of tariffs on inflation is limited, partly because the Fed has kept its policy unchanged.

Bowman began calculating the inflation rate excluding tariffs. Unlike Bowman, Schmidt has pledged never to attempt such an approach, calling it "neither meaningful nor measurable."

Before the release of the meeting minutes, Trump demanded the resignation of Fed governor Cook, after a former Trump administration official accused her of mortgage fraud. Cook responded that she would not resign for this reason. She was appointed by former President Biden.

In recent weeks, Trump's allies have intensified their pressure on Powell and other Fed leaders, demanding that they either lower interest rates or resign. Last month, some of them suggested that Powell may have lied when testifying before Congress about the ongoing costs of renovations, but the Fed subsequently provided evidence indicating that the accusation lacked basis. On July 11, a government official issued a statement suggesting that Powell's resignation was imminent, but did not provide any evidence to support this claim.

Another Biden-appointed Fed governor, Thomas Barkin, has resigned this month, stepping down nearly six months early without specifying a reason for his resignation. Trump has announced plans to appoint White House economic advisor Stephen Miran to fill the vacancy.

The above content is from Nick Timiraos, a famous journalist of The Wall Street Journal, known as the "Fed's mouthpiece" and the "new Fed correspondent."