Federal Reserve holds rates as 3 policymakers vote for hike
What's the story
The US Federal Reserve has voted to keep its key interest rate unchanged, amid concerns over persistent inflation. The decision was not unanimous, with three officials advocating for an increase. The Federal Open Market Committee (FOMC) voted 9-3 to maintain the federal funds rate at a range of 3.5% to 3.75%.
Rate hike advocates
Dissenting votes from regional presidents
The dissenting votes came from regional presidents Beth Hammack of Cleveland, Neel Kashkari of Minneapolis, and Lorie Logan of Dallas.
They have been vocal about the need for higher rates to combat inflation that has exceeded the Fed's 2% target for over five years.
The post-meeting statement noted that the three dissenters "preferred to raise the target range for the federal funds rate by 1/4 percentage point at this meeting."
Inflation concerns
Fed's post-meeting statement on economic growth
The Fed's post-meeting statement reiterated its commitment to price stability, saying, "Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East."
It also noted job growth has kept pace with workforce expansion and unemployment rates have remained stable.
Rate predictions
Goldman Sachs Asset Management's take on Fed's hawkish sentiment
The full committee in June had anticipated one quarter-percentage-point increase by the end of 2026.
"The Fed appears to be running out of patience with above-target inflation, despite recent data coming in cold," said Kay Haigh, chief investment officer of fixed income and liquidity solutions at Goldman Sachs Asset Management.
"The committee's growing hawkish sentiment, shown by the three dissents against today's hold, has also likely been exacerbated by the recent flare up in hostilities in the Middle East."