By Greg Robb
Meeting at end of April was Powell's last as Fed chair
Coffee prices are displayed at a supermarket in Alhambra, Calif.
Federal Reserve officials have a front-row seat to how businesses are reacting to the energy shock. Minutes from their two-day meeting last month, which will be published Wednesday afternoon, could shed light on whether firms are passing these higher prices to their consumers.
The minutes, which cover the last meeting with Jerome Powell as chair, may also provide insight into how Fed officials are thinking about interest rate policy as Kevin Warsh takes over as chair. As Warsh campaigned for the job over the past year, he's indicated he'd like to cut rates, the White House's preferred policy approach. But persistently high inflation could make cuts difficult to justify.
Read more: Trump says he'll let Warsh 'do what he wants to do' with interest rates. It's a remark that Fed watchers have been bracing for.
Consumer inflation accelerated to 3.8% in April, the highest reading in three years, while core prices, excluding food and energy prices, rose at a 2.8% rate.
Read: High gas prices and inflation are stressing people out
Guy LeBas, chief fixed-income strategist at Janney Capital Management, said the most interesting thing to watch for in the minutes is whether Fed officials see hints of a &#34;pass-through&#34; from surging energy prices into the core measure.
&#34;Regional Federal Reserve banks have frequent contact with businesses in their districts that have direct insight into whether and how much they'll increase their prices based on higher energy costs,&#34; LeBas said in an email.
In normal times, the Fed won't change its interest rate policy based on higher energy prices, which tend to fade without causing an inflationary spiral.
But officials will focus on the degree of pass-through. And until the picture is clearer, they will stay on hold, he said.
&#34;The Fed won't hike because oil prices are up, but they will pause in a cut process because oil prices are up,&#34; LeBas said.
The minutes of the Fed's April meeting will be released at 2 p.m. on Wednesday.
Historically high levels of disagreement at last month's meeting
At the Fed's April meeting, policymakers left interest rates unchanged and maintained &#34;easing bias&#34; language, suggesting their next move would be a rate cut. This prompted four dissents, the most since 1992.
Three of the dissents came from regional Fed presidents who wanted to remove this easing bias and send a signal that the next move could be a rate hike or a rate cut.
Fed watchers said they will be reading the minutes closely to see how much support the three dissenters had from other officials.
At their meeting in March, only &#34;some&#34; policymakers said there was a &#34;strong case&#34; for removing the easing bias.
Jeremy Schwartz, senior U.S. economist at Nomura, said the April minutes will show &#34;many&#34; participants either directly advocating a shift to the neutral guidance or at least indicating they could have supported an adjustment.
Powell told reporters that this minority view on the easing bias could become a majority view as early as the next Fed meeting on June 16-17.
&#34;Whatever silent support the dissenters may have had last month, there might be more of it in June,&#34; said Carl Weinberg, chief economist at High Frequency Economics.
Bond yields have been moving sharply higher, indicating the market is concerned about the Fed's readiness to react to high inflation.
LeBas said the market is well aware of this &#34;directional shift.&#34;
&#34;What we don't know is how much of this preference is meant as a counterweight to incoming Fed Chair Kevin Warsh's presumed dovish bias,&#34; LeBas said.
Fed minutes will do nothing to impede the march higher in yields, said Andrew Hollenhorst, U.S. chief economist at Citi.
&#34;Fed officials were less concerned with the labor market and more concerned with inflation,&#34; he said in a note to clients.
-Greg Robb
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(END) Dow Jones Newswires
05-19-26 1502ET

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The upcoming release of the Federal Reserve's April meeting minutes may reveal whether businesses are passing higher energy costs to consumers. With inflation rising to 3.8% in April, Fed officials are closely monitoring the situation as they consider interest rate policies under new chair Kevin Warsh. The minutes will also highlight significant dissent among policymakers regarding the easing bias, indicating potential shifts in future rate decisions. Market reactions suggest concerns over the Fed's approach to inflation, with bond yields rising in response.

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Are businesses passing on higher energy costs to their customers? These Fed minutes have the answer.