The Federal Reserve kept its foot on the brake again. On July 29, the FOMC voted to hold the federal funds rate at 3.5%-3.75%, the fifth consecutive meeting without a change.
Three officials wanted to go the other direction and hike rates by 25 basis points. That 9-3 vote split reflects the internal tension at the Fed right now.
The inflation problem that won’t quit
Inflation is still running above the Fed’s 2% target, and supply shocks in energy markets, driven largely by geopolitical tensions in the Middle East, keep adding pressure.
Chair Kevin Warsh has made his position crystal clear. He’s committed to a strict 2% inflation target with no soft thresholds.
