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Fed holds rates at 3.50% to 3.75% despite hawkish push
Three FOMC members dissented in favor of an immediate 25-basis-point rate hike as Chair Kevin Warsh said the Fed has no tolerance for inflation above 2%.
The Federal Reserve left its policy rate unchanged in the 3.50% to 3.75% range, but the decision came with a hawkish undertone, with three officials voting for an immediate 25-basis-point increase, according to FXStreet.
In comments highlighted by FXStreet, Fed Chair Kevin Warsh emphasized that the central bank will not accept a softer inflation goal, reiterating that it intends to return inflation to its 2% target. He also played down the committee’s divisions, describing the discussion as active and robust.
The Fed judged that economic activity is expanding at a solid pace and that the labor market remains stable. FXStreet reports that officials pointed to strong productivity growth and capital investment, while noting inflation remains elevated in part due to supply shocks, including in energy-related sectors.
FXStreet also said Warsh acknowledged recent inflation data offered some encouragement, but not enough for policymakers to declare victory before the next decision in seven to eight weeks. The Fed said it would avoid committing to a predetermined path, instead focusing on inflation trends, how broadly supply shocks are spreading, and information from financial markets.