As President Donald Trump continues to press the Federal Reserve to drop interest rates, the Fed’s Board of Governors this week voted to leave rates where they are, in the 3.50%-3.75% range.
Not only did the Fed not reduce the rate, three of its 12 governors actually wanted to raise rates.
The decision to hold steady, which had been widely expected, drew dissent from the presidents of the Fed’s regional banks in Cleveland, Dallas and Minneapolis.
Trump’s hand-picked Fed Chair Kevin Warsh, who took over as head of the Fed in May, has said he has “no tolerance” for inflation, which has been above the Fed’s target 2% rate for five years.
“Inflation remains elevated relative to the Committee’s 2% goal,” the Fed said in a short policy statement issued following its latest two-day meeting. It repeated verbatim all of the June 17 statement’s assessment of the economy.
According to a report from Reuters, the Fed said economic activity is “expanding at a solid pace,” noting, as it did in June, that job gains “have kept pace with the workforce, and the unemployment rate has changed little.”
In a press conference following the latest meeting, Warsh said, “we’ve begun a new chapter and we understand that the five-plus years of inflation above target cannot be cured in nine weeks, or by a single month of modest price decreases. This Fed will not waver” on driving inflation down to the 2% target.
While he declined to say what’s next for monetary policy, Warsh said “I want to stress, of course, that decisions by this committee matter a great deal, and where necessary and appropriate, we will not hesitate to act.”
