Fed Holds Rates as Two Officials Seek a Hike
The Federal Reserve kept its benchmark rate at 3.75% to 4% in a 10-2 vote. Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented, preferring a quarter-point increase.
The Federal Reserve left its benchmark interest rate unchanged in a range of 3.75% to 4%. The Federal Open Market Committee voted 10-2. Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented; each preferred to raise the rate by a quarter percentage point. The Fed's statement described economic activity as expanding "at a strong pace," said "inflation remains elevated" and said "the accumulation of more information" will help the committee set policy. President Donald Trump has sought to remove Cook over mortgage-fraud allegations, CNBC and Axios reported. Cook has denied the allegations, CNBC reported. Chair Kevin Warsh also announced that, starting in 2027, one of the Fed's eight annual meetings will be devoted to strategy, with no rate vote or policy statement expected. He said he expects two strategy meetings and six policy-setting meetings in 2028, and that the committee should "reserve time and space as an intellectually diverse group for strategic deliberations."
The decision
The committee kept the federal funds rate at 3-3/4 to 4 percent, according to its statement. It described economic activity as expanding "at a strong pace," according to the statement and Axios. "Inflation remains elevated," the statement said. "The accumulation of more information will help the Committee determine the policy stance appropriate to ensure a timely return of inflation to the Committee's 2 percent goal."
The dissents
Cook and Hammack voted against the decision because they preferred a quarter-point increase, according to the statement, CNBC and Axios. President Donald Trump has sought to remove Cook over mortgage-fraud allegations, CNBC and Axios reported. Cook has denied the allegations, CNBC reported.
Fewer rate-setting meetings
Warsh said the committee will still meet eight times a year. "In 2027, one meeting will focus exclusively on broad monetary policy strategy, with neither a vote on the federal funds rate nor a policy statement anticipated," he said, according to CNBC and Yahoo Finance. He said he expects two strategy meetings and six policy-setting meetings in 2028. "It's equally important we reserve time and space as an intellectually diverse group for strategic deliberations," Warsh said, according to CNBC and Axios.