Divided Federal Reserve Holds Rates as Three Officials Push for a Hike

The Federal Reserve left its benchmark interest rate unchanged at a target range of 3.50% to 3.75% following its July meeting, the fifth consecutive hold, but the decision exposed a sharp split on the policy-setting committee. The Federal Open Market Committee voted 9-3, with the presidents of the Cleveland, Minneapolis and Dallas reserve banks dissenting because they wanted to raise rates, citing inflation that has run above the central bank's 2% goal for more than five years. It was the second meeting chaired by Kevin Warsh, who has favoured giving markets less forward guidance and again issued a notably shorter policy statement. Warsh has described bringing inflation down as a choice and stressed staying focused on the overall direction of the data rather than any single reading. Investors reacted negatively, with major stock indexes falling after the decision and the Dow Jones Industrial Average dropping several hundred points. The Fed's next meeting is scheduled for mid-September, and Warsh is expected to speak at the Jackson Hole symposium in August.