The Federal Reserve voted Wednesday to leave its benchmark interest rate unchanged, though three regional bank presidents dissented in favor of a quarter-point increase.
The Federal Open Market Committee voted 9-3 to keep the federal funds rate in a range of 3.5% to 3.75%. Beth Hammack of the Cleveland Fed, Neel Kashkari of the Minneapolis Fed, and Lorie Logan of the Dallas Fed cast the dissenting votes, with the post-meeting statement noting they “preferred to raise the target range for the federal funds rate by ¼ percentage point at this meeting.”
Fed Chairman Kevin Warsh did not join the dissenters. No members of the Board of Governors voted against the hold, according to Bloomberg.
Wednesday’s statement closely tracked the language the committee used after its June 17 meeting. It described economic activity as “expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East,” and said job growth has “kept pace with the workforce.” The statement again closed with the line: “The Committee will deliver price stability.”
Futures markets had assigned roughly a one-in-three probability to a rate increase before the decision, according to CNBC. The market reaction was contained, with two-year Treasury yields turning lower and equities trimming their declines following the announcement, according to Bloomberg.
All three dissenters had publicly pushed for tighter policy in the weeks leading up to the meeting. Logan had argued that rates would need to rise “modestly,” while Hammack cited the burden of persistently higher prices on households. Kashkari had similarly pointed to inflation that has run above the Fed’s 2% goal since 2021.
Governor Christopher Waller had also recently voiced concern about inflation but voted to hold rates at this meeting.
Warsh, who became Fed chairman in May, has declined to signal where he intends to take interest rates — a posture that left markets with little clarity going into Wednesday’s decision. The full committee had penciled in one quarter-point increase by the end of 2026 at its June meeting. Markets are now looking ahead to the September meeting as the next potential opportunity for a rate move.