The Federal Reserve on Wednesday voted to keep rates unchanged.
The Federal Open Market Committee (FOMC) voted 9-3 to keep rates at the range of 3.5% to 3.75%.
CNBC reported:
The Federal Reserve kept interest rates unchanged Wednesday, but the central bank’s latest policy decision could still have significant implications for household budgets.
Higher energy prices stemming from the Iran conflict may have lasting inflationary effects, which likely contributed to the Fed’s decision to leave rates on hold as policymakers wait to gauge the economic fallout, economists said. The dynamic could also lead policymakers to consider raising rates at their September meeting, even as President Donald Trump has said that the U.S. “should have the lowest interest rate in the world.”
“It’s very difficult to read the chairman and know his view of the path forward,” said Eugenio Alemán, chief economist at Raymond James, referring to new Fed Chairman Kevin Warsh.
However, any move toward higher rates would increase borrowing costs for consumers at a time when affordability pressures are already mounting. “Consumers will remain stressed going forward, and if they start increasing interest rates, conditions are going to deteriorate further,” Alemán said.
The FOMC issued a statement:
The Committee decided to maintain the target range for the federal funds rate at 3-1/2 to 3-3/4 percent, in support of the Federal Reserve’s dual mandate. The Committee is continuing its policy of maintaining ample reserves in the banking system.
Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East. Productivity growth and capital investment are strong. 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. The Committee will deliver price stability.
Voting against the monetary policy action were Beth M. Hammack, Neel Kashkari, and Lorie K. Logan, who preferred to raise the target range for the federal funds rate by 1/4 percentage point at this meeting.
Fed Chairman Kevin Warsh held a press conference at the conclusion of the July meeting.
WATCH:
WATCH LIVE: Federal Reserve Chair Kevin Warsh delivers remarks after interest rate decision https://t.co/KGiV9pyInd
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