The Federal Reserve in early June saw that negative risks from U.S. trade policy "had intensified" and could have negative effects on business sentiment and investment spending, according to minutes of their policy meeting released Thursday.
Many of the central bank's business contacts had expressed concern about the possible adverse effects of tariffs and other trade restrictions on future investment activity both in the U.S. and abroad, according to the minutes. Some contacts said they were postponing or scaling backing plans for capital spending. Contacts in the aluminum and steel industries expected higher prices from tariffs already in place, but said they had no plans for new investment to increase capacity.
Despite this concern, there was broad support among policy makers of continued "gradual" rate hikes. Officials noted that the benchmark federal funds rate could be at or above its "neutral" level "sometime next year." That is the level that neither boosts or dampens activity.