The minutes from the Federal Open Market Committee (FOMC) May meeting conveyed a decidedly hawkish tone.

The minutes from the May 1st FOMC meeting struck a decidedly hawkish tone, aligning with expectations as the Fed had not yet received the April CPI report. At the time, the inflation trajectory appeared more concerning than it does now, leading the market to dismiss the update as outdated. The minutes noted that “various participants mentioned a willingness to tighten policy further should risks to inflation materialize in a way that such an action became appropriate,” though Powell likely did not share this sentiment based on his press conference comments. Reflecting the perceived stickiness of inflation at the time, “a number of participants noted uncertainty regarding the degree of restrictiveness of current financial conditions and the associated risk that such conditions were insufficiently restrictive on aggregate demand and inflation.”