Divided Fed holds interest rates steady, but three members voted to hike

The Federal Reserve on Wednesday voted to hold its key interest rate steady but not without opposition from three officials who have expressed concern over inflation and wanted to hike. Despite increasing support among some officials for a rate increase, the Federal Open Market Committee voted 9-3 to leave the federal funds rate in a range between 3.5% and 3.75%. All of the “no” votes came from regional presidents – Beth Hammack of Cleveland, Neel Kashkari of Minneapolis and Lorie Logan of Dallas, who had been the most explicit about the need for higher rates to address inflation that has been above the Fed’s 2% target for more than five years. The post meeting statement noted that the three dissenters “preferred to raise the target range for the federal funds rate by ¼ percentage point at this meeting.” The no votes presented an early challenge to Chairman Kevin Warsh, whose refusal to provide clear road signs on where monetary policy is headed led to an unusually high level of uncertainty heading into the meeting. The post-meeting statement was almost identical to the one following the June 17 decision and was in keeping with the Fed’s actions all year, following three rate cuts in the latter part of 2025.