The Fed Holds Interest Rates Steady With Three Dissents For A Hike

With a very short statement the Fed remains on pause.

FOMC Statement

FOMC Press Statement: The Federal Open Market Committee approved the following statement for release by a 9 – 3 vote:

The Committee decided to maintain the target range for the federal funds rate at 3-1/2 to 3-3/4 percent, in support of the Federal Reserve’s dual mandate. The Committee is continuing its policy of maintaining ample reserves in the banking system.

Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East. Productivity growth and capital investment are strong. Job gains have kept pace with the workforce, and the unemployment rate has changed little.

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 Committee will deliver price stability.

Voting against the monetary policy action were Beth M. Hammack, Neel Kashkari, and Lorie K. Logan, who preferred to raise the target range for the federal funds rate by 1/4 percentage point at this meeting.

Unless we see some very good inflation data in the next 48 days the Fed is going to hike rates.

There is no August meeting.

The Fed meets next on September 16, 48 days from today.

I expect a hike unless there is a labor market collapse.

Earlier today I took a snapshot o expectations through March of 2027. Tomorrow, I will do a comparison to see what changed.

For discussion, please see The Market Expects Two Interest Rate Hikes this Year, Warsh May Change That

The Problem for Warsh

If the market continues to put upward pressure on rates but Warsh insists otherwise, it will take Quantitative Easing (QE) or other market manipulations to maintain the Fed’s target.

However, Warsh wants to eliminate forward guidance and shrink the Fed’s balance sheet. The latter will only be feasible if the market agrees with the Fed’s target.

And removing forward guidance eliminates one tool for Fed manipulation.

Live Broadcast of Press Conference

Here is the Live Broadcast of the Press Conference.

Alternatively watch on Youtube below.