Divided Federal Reserve Holds Rates Steady 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 late-July meeting, the fifth consecutive hold, but the decision exposed a widening split on the policy committee. The vote was 9-3, with regional presidents Beth Hammack of Cleveland, Neel Kashkari of Minneapolis and Lorie Logan of Dallas dissenting because they wanted to raise rates now, arguing that inflation has stayed above the central bank's 2% target for years. It was the second meeting chaired by Kevin Warsh, who has described inflation as a policy choice and has favoured giving markets fewer explicit signals about the Fed's next move; the accompanying statement was again unusually brief. The committee said economic activity is expanding at a solid pace despite uncertainty tied to the Middle East conflict, while noting that inflation remains elevated. Stocks fell after the decision and Warsh's press conference, with the Dow dropping more than 800 points. The next policy meeting is scheduled for mid-September, following the Jackson Hole symposium in August.