Divided Fed holds interest rates steady, but three members voted to hike
Get the Finance newsletter
Daily finance — markets, central banks, M&A, the prints that move money. Free.
- Federal Reserve's FOMC voted 9-3 to hold the federal funds rate at 3.5%-3.75%, with three regional Fed presidents dissenting in favor of a 0.25 percentage point hike.
- Beth Hammack, Neel Kashkari and Lorie Logan — the Cleveland, Minneapolis and Dallas Fed presidents — cast the dissenting votes, citing inflation above the Fed's 2% target for more than five years.
- The three-way dissent marked the first time since September 2016 that FOMC members dissented with a unified view on which direction rates should head.
- Chair Kevin Warsh produced a shorter-than-usual statement consistent with his stated disdain for forward guidance; he has created five task forces, one dedicated to Fed communications.
- Inflation pressures have been driven by Trump tariffs and higher energy costs tied to the Iran conflict, per Goldman Sachs Asset Management CIO Kay Haigh; the June dot plot penciled in one quarter-point hike by end of 2026.
- President Trump publicly backed Warsh as "fantastic" while accusing other Fed officials of having "bad intentions" and possible political motivations.
Why it matters: The 9-3 split — the first unified rate-direction dissent since 2016 — signals growing internal pressure on Chair Warsh's new Fed to act on inflation that has run above target for five-plus years, while Trump's public backing of Warsh against other Fed officials raises fresh independence questions.
