Key facts
- The Federal Reserve's Federal Open Market Committee voted 9-3 to maintain the federal funds rate at 3.5% to 3.75%.
- Three FOMC members dissented, preferring a 25-basis-point rate hike.
- Dissenting officials cited concerns that inflation is not on a sustainable path to the Fed's 2% target.
- Elevated energy prices, influenced by recent geopolitical conflicts, are contributing to persistent inflation.
- Fed Chair Kevin Warsh stated the central bank's commitment to achieving price stability and returning inflation to the 2% target.
The Federal Reserve's Federal Open Market Committee (FOMC) voted 9-3 to keep its benchmark interest rate unchanged at a range of 3.5% to 3.75%. Three members dissented, advocating for a 25-basis-point rate hike due to persistent inflation concerns.
Fed Chair Kevin Warsh, presiding over his second meeting, acknowledged the challenge of bringing inflation down from levels above the central bank's 2% target, especially after a recent energy price shock. He emphasized the Fed's commitment to price stability.
Dallas Fed President Lorie Logan argued that inflation is not on a sustainable path to the 2% target and that current monetary policy is not sufficiently restraining the economy. She noted that the labor market remains solid, reducing concerns about maximum employment.
Minneapolis Fed President Neel Kashkari drew parallels between the current inflationary period and the 1970s, highlighting the impact of various supply shocks. He suggested that modest action now could prevent sharper measures later.
The Fed's preferred inflation gauge, the PCE index, showed a 3.7% increase in June compared to the previous year, indicating that inflation remains elevated despite some recent moderation.