Federal Reserve minutes from the July meeting showed that inflation remained above the 2% target, with risks still tilted to the upside. Participants cited tariffs, the Middle East conflict and strong AI-related investment as potential sources of persistent price pressure. The labor market remained broadly stable and economic activity continued to expand at a solid pace.

Most participants supported keeping the federal funds rate unchanged, but several favored a 25-basis-point hike. Many said further tightening could be warranted if inflation failed to ease, while some questioned whether current financial conditions were restrictive enough to bring inflation back to target. The minutes also highlighted financial-stability risks from elevated valuations and growing leverage around AI infrastructure, warning that a reassessment of the sector’s long-term profitability could trigger a broader asset-price repricing.