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Fed holds rates at 3.50%-3.75% as Kashkari joins dissenters

The 9-3 vote and Minneapolis Fed President Neel Kashkari dissent suggest tighter policy support is broadening for a possible September hike.

Reported · Written up by our desk · Central Banks

The Federal Reserve left the federal funds target range unchanged at 3.50% to 3.75%, but the decision carried a more hawkish signal than markets expected, driven by a 9-3 vote.

Cleveland Fed President Beth Hammack and Dallas Fed President Lorie Logan dissented in favor of an immediate 25 basis point hike, and Minneapolis Fed President Neel Kashkari also joined them, reinforcing expectations that another rate increase could come as soon as September.

In its statement, the Fed said economic activity is expanding at a solid pace despite elevated uncertainty tied partly to the Middle East conflict, and it described the labor market as resilient with job gains keeping pace with workforce growth and unemployment little changed.

On inflation, policymakers reiterated that price pressures remain elevated versus their 2% objective and acknowledged that supply shocks, particularly in energy, have contributed to persistent inflation, according to Action Forex.

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