The minutes from the Fed’s June meeting showed that the Fed is planning additional hikes to their benchmark Fed Funds Rate this year. This is the interest rate for overnight borrowing for banks and it is not the same as mortgage rates. When the Fed hikes the Fed Funds Rate, they are trying to slow the economy and curb inflation. The minutes also showed that members decided against a hike at their meeting in June, citing concerns over economic growth, so they could have more time to assess incoming data. However, some participants indicated that they favored a 25-basis point hike last month.

What’s the bottom line? Interestingly, the Fed wants to continue hiking even though inflation is coming down and their base case is still for a mild recession later this year. If they believe we are going to enter a recession, do they really need to continue hiking the Fed Funds Rate?