The Federal Reserve on Wednesday voted to hold its key interest rate steady, but the decision came with notable opposition from three officials who wanted to raise rates over inflation concerns.
A divided committee
The Federal Open Market Committee voted 9-3 to leave the federal funds rate in a range between 3.5% and 3.75%.
All three “no” votes came from regional presidents:
Beth Hammack of Cleveland, Neel Kashkari of Minneapolis, and Lorie Logan of Dallas.
The post-meeting statement noted the three dissenters:
“preferred to raise the target range for the federal funds rate by ¼ percentage point at this meeting.”
Markets had largely expected another hold, though the CME Group’s FedWatch tool put the chance of a surprise hike at about 1-in-3.
Inflation pressures persist
Logan had been the most explicit about the need for higher rates, pointing to inflation that has stayed above the Fed’s 2% target for more than five years.
Recent price pressures have reflected both tariffs imposed by President Donald Trump and higher energy costs tied to the Iran conflict.
The statement said economic activity “is expanding at a solid pace despite elevated uncertainty” partly due to the Middle East conflict, and it concluded with the simple line, “The Committee will deliver price stability.”
Warsh’s early test
The dissents posed an early challenge to Chairman Kevin Warsh, who has refused to provide clear signals on where policy is headed.
Warsh has called inflation “a choice” and pushed to change how the Fed communicates, keeping the statement much shorter than the norm.
Earlier this week, Trump backed Warsh, calling him “fantastic” while saying other Fed officials had “bad intentions.”
