I=7 Fed officials divided on where interest rates should go with several policymakers suggesting the fed may need to raise interest rates if inflation stays above their target, minutes show
Fed minutes indicate participants were divided on where the policy should head.
“Some participants commented that it would likely be appropriate to hold the policy rate steady for some time as the Committee carefully assesses incoming data, and a number of these participants judged that additional policy easing may not be warranted until there was clear indication that the progress of disinflation was firmly back on track.”
Several participants wanted the post-meeting statement to reflect a two-sided description of future monetary policy path.
“Several participants indicated that they would have supported a two-sided description of the Committee’s future interest rate decisions, reflecting the possibility that upward adjustments to the target range for the federal funds rate could be appropriate if inflation remains at above-target levels.”
I=7 Fed keeps interest rate unchanged in the range of 3.5%-3.75% as was widely expected by the market but maintained projections for one rate cut this year
The post statement said “has been little changed in recent months” replacing the January statement which said unemployment rate “has shown some signs of stabilization”.
The statement reiterated that the economic activity has been expanding at a solid pace but pointed out that the impact of Iran conflict on the U.S. economy is uncertain.
Polycymakers raised their outlook for growth in 2026 to 2.4%, from the 2.3% they forecast in December, left unemployment rate forecast for 2026 at 4.4% and raised their outlook for 2026 inflation to 2.7% from 2.4%.
Stephen I. Miran was the only dissent, prefering a rate cut of 25 basis points.
I=8 DOJ drops criminal investigations of Federal Reserve Chair Jerome Powell, removing major hurdle for Kevin Warsh confirmation
Sen. Thom Tillis, a North Carolina Republican, had put an effective hold on the Senate confirming Warsh unless the criminal investigation of Powell was dropped.
Jeanine Pirro, the prosecutor who was in charge of the investigation said the DOJ was dropping the investigation since the Fed’s inspector general has been tasked to carry out the probe.
“Accordingly, I have directed my office to close our investigation as the IG undertakes this inquiry. Note well, however, that I will not hesitate to restart a criminal investigation should the facts warrant doing so,” she said.
Powell’s term ends on May 15, leaving roughly three weeks for Warsh’s confirmation, enough time given that past confirmations have often taken just a few days.
I=7 Fed keeps interest rate unchanged in the range of 3.5%-3.75% as was widely expected by the market, three mebers dissent the inclusion of an easing bias
There were no major changes to the post-meeting statement other than the inclusion of the statement saying the developments in the Middle East are creating uncertainty on the economic outlook.
The policy decision had four dissents, the highest level since 1992, with Stephen Miran preferring a 25 basis points rate cut and Beth Hammack, Neel Kashkari, and Lorie Logan against the inclusion of an easing bias in the statement (but supporting the hold).
“Job gains have remained low, on average, and the unemployment rate has been little changed in recent months. Inflation is elevated, in part reflecting the recent increase in global energy prices,” the statement reads.
I=6 Fed Chair Jerome Powell said he will stayon the Board of Governors after his term as Chair ends next month, denying Trump majority in the board
By staying on, Powell will be denying President Trump the majority in the fed’s board.
“The things that have happened really in the last three months have, I think, left me no choice but to stay until I see them through at least that long,” Powell said.
I=8 Fed keeps interest rate unchanged in the range of 3.5%-3.75%, as was widely expected by the market but signals a hike is possible this year
The Fed Open Committee voted unanimously to keep interest rate unchanged in a range of 3.5%-3.75%.
In the “dot plot”, the committee removed their prior outlook for a rate cut this year and indicated that a hike is possible.
Eight of the participants expects rate to remain unchanged this year, one sees a cut and nine expect atleast one hike.
They added that they will maintain “ample reserves” in the banking system, indicating there are no immediate plans to cut the fed’s bond holdings on its $6.7 trillion balance sheet.
The committee raised their inflation projections for 2026 to 3.6% on headline and 3.3% for core, from 2.7% for both measures.
The lowered their GDP and unemployment projections to 2.2% and 4.3%, down from 2.4% and 4.4% in March respectively.
I=6 Fed President Kevin Wash reiterates no “forward guidance” but said inflation is too high
“We’re all in the price stability business, that might not be our only business, but if there was a common thing I heard over the last couple of days, it was open-mindedness on these questions of AI, open-mindedness on productivity, but we’ve all looked around, and we’ve seen that prices are too high,” Warsh said
I=6 Fed minutes show high uncertainty over the monetary policy outlook
Fed minutes indicate participants were split over the direction of interest rates.
“Many participants indicated that the appropriate level of the federal funds rate would be within or slightly below the current target range at the end of this year. Many other participants, however, assessed that the appropriate level of the federal funds rate would be above the current target range at the end of this year,” Fed minutes indicate.
“Participants noted that their future policy actions would depend on incoming information."
The committee removed the language that had indicated a prior easing bias.
“Most participants emphasized that they preferred not to repeat the language in the previous postmeeting statement that had suggested an easing bias regarding the likely direction of the Committee’s future interest rate decisions.”
I=5 Fed’s Warsh said the committee has no tolerance for “persistently elevated inflation”
“The members of our Committee have no tolerance for persistently elevated inflation. And we share a resolute commitment to restoring price stability,” he said in prepared remarks to Congress.
Warsh said the economy “is expanding at a solid pace, showing resilience in the face of recent developments.”
I=8 Fed keeps interest rate unchanged in the range of 3.5%-3.75%, as was expected
FOMC voted 9-3 to keep interest rate unchanged in the range of 3.5%-3.75%, as was expected.
The three dissenters “preferred to raise the target range for the federal funds rate by ¼ percentage point at this meeting.”
The post-meeting statement was almost identical to the one given in June.
“Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East,” the statement said. Job gains have kept pace with the workforce, and the unemployment rate has changed little."
“Inflation remains elevated relative to the Committee’s 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy.”
I=7 Fed Chair Warsh said inflation is running too high but avoids committing to a forward guidance or verbal cues about the Fed’s intentions
Fed Chair Kevin Warsh said inflation is running hot.
“While this summer’s PCE and CPI readings were better than expected, they do not tell me that underlying trends have meaningfully improved,” Warsh said in a speech at the Jackson Hole.
“We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do. That’s our job . . . our mandate . . . and our charge to keep,” He added.
Warsh avoided issuing forward guidance or verbal cues on the fed’s next steps.
“You can call it an outline . . . you can call it a trail map . . . just don’t call it forward guidance,” he pointed out.
He pointed out that the fed should try to avoid a scenario where market participants trade on the fed’s next move.
“And market participants will always try to anticipate what we will do next. But we should not indulge a regime in which market participants are looking primarily to the Fed for their next trade,” he said.
Warsh largely expressed confidence in the economy, saying it “appears to have strengthened.”
“For my part, today I am impressed by the overall performance of the economy, which appears to have strengthened,” he said.
“I would be hard pressed to describe broad financial conditions as restrictive,” he added.
I=6 Federal Reserve Governor Christopher Waller said he’s leaning towards keeping interest rate unchanged in the next meeting
Waller noted that recent trends “suggest we are finally seeing some signs of disinflation.”
“If this continues in the data due over the next two weeks, I would be inclined to support holding the target for the federal funds rate at its current setting,” Waller said in remarks for a Reuters interview.
“I’m going to paraphrase John Lennon here: Give disinflation a chance. We can wait one meeting,” Waller said. “What’s the cost of waiting one meeting? Hiking 25 basis points, one meeting right now, is not going to bring the CPI down to 2%.”
However, he noted that he could change course if any new indications emerge between now and the meeting.
“I judge that policy is currently only slightly restricting aggregate demand, and it may not take much acceleration in inflation to nudge me into supporting tighter policy,” Waller said. “If there is evidence that progress toward 2% inflation reversed in August, a small adjustment in our stance would help ensure that it resumes.”
Market’s expectation for a rate hike at the Sept. 15-16 dropped 15% to 48.4% following his remarks.
I=8 Fed raises interest rates by 25 basis points as was widely expected by the market and signals one more hike this year
The Federal Open Market Committee (FOMC) voted 12-0 to increase its key interest rate by 25 basis points to a range of 3.75%-4.0%, as was widely expected by the market.
The committee statement pointed out that while “inflation remains elevated”, “economic activity is expanding at a solid pace” and “unemployment rate has changed little”.
Sixteen Fed officials now expect at least one more rate hike in 2026, up from six in June who projected at least two increases for the full year.
Fed officials raised their median projection for the policy rate at the end of 2026 to a range of 4.1%-4.4% from 3.6%-4.1% projected in June.
The median projection for 2027 implies no further rate hikes next year, although eight policymakers expect rates to be another 25 basis points higher by the end of 2027 than they are today.
