Fed Keeps Key Rate Steady, With 3 Dissents

The Federal Reserve on Wednesday held its key interest rate parked in the 3.5% to 3.75% range where it has been all year. The vote to keep the rate unchanged at a fifth straight meeting was 9-3, though a hike is widely expected in September, the AP reports. The three dissenters, who favored a quarter-point rate hike, were Beth Hammack, president of the Federal Reserve Bank of Cleveland; Neel Kashkari, president of the Minneapolis Fed; and Lorie Logan, president of the Dallas Fed. With inflation easing in June, investors had largely bet on no move until at least September, though some traders saw a higher chance of a July hike after the US-Iran ceasefire unraveled and oil prices jumped, the Wall Street Journal reports.

A surprise hike would have undercut officials who'd projected patience and complicated the White House's message that inflation is tamed, though it would also have distanced Fed chair Kevin Warsh from accusations he's politically driven, the Journal notes. Warsh has vowed that he will finally break a five-year stretch of above-target inflation—though he hasn't clearly explained how tighter policy solves today's oil- and AI-related pressures. This was the Fed's second interest-rate decision since Warsh succeeded Jerome Powell.