Fed minutes show inflation concerns still shaping policy

Continuing concerns about inflation underpin the Federal Reserve’s stand against changes in interest rates.

That line of thinking prevailed as the policymakers held the rates steady last month despite a competing concern that the housing slump might short-circuit the economic expansion.

Anguish over inflation held sway at the June 27 meeting of monetary policymakers -- as it had at previous sessions -- according to minutes of the closed-door June 27-28 deliberations, released Thursday. This record shows that their “predominate concern” continued to be whether inflation would fail to recede as anticipated.

Fed Chairman Ben S. Bernanke and his central bank colleagues noted that there had been some improvements on underlying inflation readings, but this was “not seen as convincing evidence that the recent moderation of core inflation would be sustained,” according to the Fed minutes. Core, or underlying, inflation excludes volatile energy and food prices. High food and energy prices, meanwhile, have boosted the overall inflation rate, making Fed officials wonder whether that would affect the mind-sets of consumers, businesses and investors, which in turn could make them act in ways that could aggravate inflation.