FOMC minutes: Inflation risks could require further tightening

• Federal Reserve released the minutes from its July 25-26 meeting.
• The minutes showed most fed officials saw a “significant” upside risk to inflation. 
• US Dollar rises modestly after the minutes.  

The Federal Open Market Committee (FOMC) released the minutes of its July meeting, triggering a limited reaction across financial markets. According to the document, most federal reserve officials saw "significant" upside risks to inflation. Those risks could require further tightening. Two officials favored holding interest rates steady in July.

At the July meeting, as expected, the Fed raised interest rates by 25 basis points to 5.25%-5.50%, the highest since 2001, after a pause in June. The minutes showed that participants still see below-trend growth and a softer labor market as necessary to restore economic balance.

Market reaction: 

The US Dollar rose modestly after the minutes, reaching fresh highs against the EUR, AUD, NZD, CAD, and JPY. The US Dollar Index is trading at daily highs around 103.40, near weekly highs, up 0.20% for the day.