There was a very large elephant in the FOMC's boardroom during their July 31 and August 1 meeting. Minutes from the meeting make no mention whatsoever of President Trump's call on July 20 for the Fed not to continue raising rates, the first time in memory that a president has put public pressure on the Fed to change policy.
And what are in the minutes won't be easing the president's concerns. "Many" FOMC members agreed at the meeting that another rate hike would soon be appropriate should the economy unfold as expected. Members said the labor market had strengthened and that wage hikes would likely occur "before long" though a "few" thought that labor market slack would remain. Tariffs were also a concern regarding inflation though effects were expected to be limited and that inflation would remain near the Fed's 2 percent goal. Trade issues were in fact a general concern, with all members saying a long dispute could have adverse but still unknown impacts.
The Trump administration will further note that many of the members saw a coming need to change the FOMC's reference to policy being accommodative, again reflecting upcoming rate hikes and movement to policy neutrality. On the yield curve, several members raised concern that flattening precedes recessions though others were not convinced that this is a statistically meaningful indicator. On asset prices which include equities, members noted that they remain elevated.
However invisible in the official documents, the president's arm twisting was sure to have been the hot topic in the hallways and elevators at the Fed. The FOMC meets next at the end of September when a press conference is scheduled in an event that will certainly raise the question of the president's public opposition to Fed policy and what it means for the central bank's tradition of independence. Making the topic even hotter will very likely be a rate hike at that meeting, the third one of the year and with another already penciled in (based on FOMC forecasts) before year end.