In a ten-to-two vote, the US Federal Reserve held benchmark rates steady just as insiders anticipated. Committee members Lisa D. Cook and Beth M. Hammack voted against the decision, preferring to raise rates by 25 basis points.
Markets were steady as the policy decision was expected.
The Federal Open Market Committee (FOMC) stated:
“The Committee decided to maintain the target range for the federal funds rate at 3-3/4 to 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.”
The Committee added that, although risks remain, economic activity is expanding at a strong pace. As well, inflation remains elevated.
The Federal Reserve has a dual mandate of full employment and 2% inflation.
While markets thought there would be no rate change this round, expectations are that rates will rise before the end of 2026.
Fed Chairman Kevin Warsh will hold a press event at 2:30 PM ET, where he is expected to reveal little additional information beyond the rate decision.
One wild card is the President’s opinion, who has advocated for lower interest rates. While it is important to prove the Fed’s independence, the President can be forceful in pushing his desired outcomes. Warsh’s predecessor was on the receiving end of President Trump’s animosity. Chairman Warsh has not yet elicited a similar response.
