\n<\/p>\n
The US Federal Reserve held interest rates steady on Wednesday in a divided vote, indicating growing pressure on the central bank to address heightened inflation.<\/p>\n
The Fed\u2019s federal open market committee voted 9-3 to maintain rates, with three dissenting members indicating a preference to raise the rate by a quarter-percentage point. It was the first time in a decade that three board members shared dissent over a policy decision.<\/p>\n
Cooler inflation data published earlier this month may have eased expectations for an imminent rate hike, but Kevin Warsh, the new Fed chair, said in a news conference that the committee was less interested in \u201cany one piece of data\u201d and was more focused on overall trends. The tenuous peace deal between the US and Iran has also sent energy prices creeping up again.<\/p>\n
Warsh has repeated that he wants policy decisions to emerge from a \u201cgood family fight\u201d and said on Wednesday he \u201cgot one\u201d during his second Fed meeting as chair.<\/p>\n
\u201cMost of our discussion was on the big questions that matter to the conduct of monetary policy,\u201d Warsh said. \u201cWe didn\u2019t hide from them. We weren\u2019t scared of them. There was a lot more interaction between my colleagues, it was a real family fight. My view, which you\u2019ve long heard, is that\u2019s the better way to get policy right.\u201d<\/p>\n
Just two weeks ago, one of the dissenting bank presidents, Lorie Logan of Dallas, made the case for \u201cmodestly higher interest rates\u201d, arguing in public remarks that they would better balance the \u201coutlook and risks\u201d for the Fed\u2019s dual mandate of maximum employment and price stability.<\/p>\n
\u201cInflation has been too high, for too long, and does not appear to be on track all the way back to 2%,\u201d she said. \u201cAnd the inflation risks are to the upside. The labor market, meanwhile, is solid. Without any policy restraint, these conditions are likely to continue until there\u2019s an unanticipated shock.\u201d<\/p>\n
Logan joined Beth Hammack in Cleveland and Neel Kashkari in Minneapolis in the dissenting minority. The three bank presidents have formed a bloc before, most recently in April when they all disagreed with the committee\u2019s decision to include a forward looking statement, or \u201ceasing bias\u201d, in the Fed\u2019s news release.<\/p>\n
Though Warsh was adamant about delivering price stability in Wednesday\u2019s news conference, it was unclear exactly what tools he planned to use to achieve that goal. While he said that interest rates could be used as \u201cpart of that solution\u201d, he added: \u201cI wouldn\u2019t say it\u2019s in isolation.\u201d<\/p>\n
Warsh has signaled he is ushering in a new era at the central bank, one that emphasizes a reservedness toward forward guidance. At his first meeting in June, he announced five new taskforces \u2013 comprising economics professors, business leaders and former central bank governors \u2013 that are meant to rethink how the Fed approaches its communications, data, balance sheet policy, inflation framework and the impact of artificial intelligence on its policy judgments.<\/p>\n
The US-Israel war with Iran, which has endured since the end of February, has pushed energy prices higher for American households and businesses.<\/p>\n
The Fed\u2019s main tool to combat higher prices has traditionally been to hike interest rates, which raises borrowing costs and, in effect, cools the economy. But Trump has persistently and aggressively called for rate cuts since the start of his presidency, going so far as to attack the previous Fed chair, Jerome Powell \u2013 who is still on the Fed\u2019s board \u2013 with verbal insults and target him with a Department of Justice investigation for failing to deliver.<\/p>\n
Fed governors periodically release forward-looking projections illustrating when they think further rate changes will occur. Last month, half of all Fed members projected at least one rate increase this year, in a U-turn in outlook from just months earlier, when a majority of Fed members called for at least one rate cut over the same time period.<\/p>\n
Wednesday\u2019s decision is the fifth time rates have been left unchanged since December, despite Donald Trump\u2019s renewed calls to lower rates.<\/p>\n
Trump on Monday repeated his push for lower interest rates, adding that the US \u201cshould have the lowest rates in the world\u201d.<\/p>\n
Trump spared Warsh from any blame, calling him \u201cfantastic\u201d and implying Warsh would want to cut rates despite the opinions of his fellow board members, who Trump called \u201cvery political\u201d.<\/p>\n","protected":false},"excerpt":{"rendered":"
The US Federal Reserve held interest rates steady on Wednesday in a divided vote, indicating growing pressure on the central bank to address heightened inflation. The Fed\u2019s federal open market committee voted 9-3 to maintain rates, with three dissenting members indicating a preference to raise the rate by a quarter-percentage point. It was the first<\/p>\n","protected":false},"author":1,"featured_media":51522,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[49],"tags":[680,1404,4437,518,519,520,4864,9020,71],"class_list":{"0":"post-51521","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-calls","9":"tag-economy","10":"tag-fed","11":"tag-holds","12":"tag-interest","13":"tag-rates","14":"tag-renewed","15":"tag-steady","16":"tag-trumps"},"_links":{"self":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/51521","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=51521"}],"version-history":[{"count":0,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/51521\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/media\/51522"}],"wp:attachment":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=51521"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=51521"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=51521"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}