Fed officials said strains on lower income Americans are a "significant concern"

What they're saying: Many Fed officials pointed out that poorer households faced "increasing strains" with high living costs, while savings accumulated during the pandemic had largely run dry, according to the minutes from the June 11-12 meeting.

• These strains among lower- to moderate-income households — evident in the upswing in delinquency rates for credit cars and auto loans — were "a significant concern," those officials said.
• Among other economic risks, these strains might cause a sharp "curtailment of consumer spending," officials said. Spending, they noted, was already moderating as a result of higher interest rates.

In contrast, spending by some higher income households "was likely being bolstered by increasing asset prices," a few participants said.

The big picture: The Fed left interest rates at a two-decade high last month, while officials expect to only cut rates once in 2024.

• Fed chair Jerome Powell told reporters at a news conference last month that the central bank wanted to see more evidence that inflation was cooling before adjusting rates lower.
• Fed officials acknowledged at the policy meeting that "although inflation remained elevated, there had been modest further progress toward the 2 percent goal in recent months," the minutes say.

Between the lines: Powell said earlier this week that the Fed faces a delicate balance in deciding when to cut rates.

• If officials cut too soon, it might risk a flare-up in inflation. But waiting too long might "unnecessarily undermine the recovery and expansion," he said.

The bottom line: This tension was reflected in policymakers' discussions last month, according to the minutes.

• Inflation might stay elevated as a result of "worsening geopolitics, heightened trade tensions, more persistent shelter price inflation" and more, some participants said.
• But a number of officials cited the risk that an already cooler labor market could give way to "an increased pace of layoffs."