For the third straight time, Federal Reserve officials decided to leave interest rates right where they are, though a rift in its governing board appears to be widening.
In holding rates steady – at a range of 3.5% to 3.75% — the Fed signalled a concern over rising inflation amid rising energy costs that polling shows have Americans less optimistic about the economy.
The decision to hold rates steady was no surprise, but four governors dissented, the most since October 1992. According to The Washington Post, three of the four dissenters actually favored the pause but objected to language in a closely watched Fed statement the Post report said suggests a bias toward eventually resuming rate cuts.
It’s likely the final policy meeting for Jerome Powell as chair. President Donald Trump’s nomination of Kevin Warsh to succeed Powell passed out of the Senate Banking Committee earlier Wednesday.
“The economic outlook remains highly uncertain, and the conflict in the Middle East has added to this uncertainty. In the near term, higher energy prices will push up overall inflation,” Powell said during a news conference. “Beyond that, the scope and duration of potential effects on the economy remain unclear, as does the future course of the conflict itself.”
According to The Post, three presidents of regional Fed banks — Beth Hammack of Cleveland, Neel Kashkari of Minneapolis, and Lorie Logan of Dallas — backed the rate decision but objected to retaining language they described as an “easing bias” that signaled a future rate cut is more likely than a hike. A fourth official, Fed governor Stephen Miran, dissented in favor of a rate cut, as he has since joining the board.
