Fed holds benchmark rate steady in vote with three dissents
Dive Brief:
- The Federal Reserve on Wednesday held the main interest rate at a range between 3.5% and 3.75%, after a two-day meeting as it keeps a firm focus on the central bank’s dual mandate and seeks to foster price stability amid conflict and “elevated uncertainty” in the Middle East, according to a statement.
- The decision was made with a 9-3 vote, with Neel Kashkari, president of the Federal Reserve Bank of Minneapolis; Beth M. Hammack, president of the Federal Reserve Bank of Cleveland; and Lorie K. Logan, president of the Federal Reserve Bank of Dallas dissenting in favor of a 0.25% hike to the federal funds rate, according to the central bank.
- “Inflation remains elevated relative to the Committee’s 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy,” the Federal Open Markets Committee said. “ The Committee will deliver price stability.”
Dive Insight:
The FOMC’s July decision is the second made under the new leadership of Federal Reserve Chairman Kevin Warsh, who in June noted the central bank’s commitment to easing pricing pressures.
Warsh in June pledged that the central bank would continue its efforts to ease inflation following a less-than-expected rise in consumer prices last month, CFO Dive previously reported. Consumer prices rose at an annual rate of 3.5% in June, compared to a 4.2% pace in May, according to the Bureau of Labor Statistics.
The message signaled a shift for Warsh, who, prior to being confirmed as chair in May, repeatedly called for large-scale change at the central bank. In remarks to the Senate Banking Committee before his confirmation, he called for a “regime change in the conduct of policy” at the Fed, which included recasting its framework for inflation.
He has also called for the central bank to be more opaque in its communications of monetary policy, in a bid to allow markets to respond more independently to economic data, according to The Wall Street Journal. In June, following Warsh’s first meeting as chair, the FOMC removed language from a policy document suggesting it would lean toward cutting rates in the future, CFO Dive previously reported.
This is a developing story. Please check CFO Dive’s website for updates.
