The Federal Reserve left its benchmark interest rate unchanged for the third straight meeting but signaled it could still cut rates in the coming months, moves that attracted the most dissents since October 1992.
The Fed on Wednesday kept its short-term rate at 3.6% and retained language in its statement suggesting the next move would be a rate reduction. Three officials dissented in favor of removing the reference to a future cut, while a fourth, Stephen Miran, dissented in favor of an immediate rate cut on Wednesday.
The dissents underscore the level of division on the Fed’s 12-member rate-setting committee ahead of the departure of Chair Jerome Powell, whose term ends May 15. The Senate Banking Committee approved his successor, Trump appointee Kevin Warsh, earlier Wednesday on a party-line vote. Warsh has argued in favor of rate cuts, as Trump has demanded.
“Developments in the Middle East are contributing to a high level of uncertainty about the economic outlook,” the Fed said in a statement after its two-day meeting. “Inflation is elevated, in part reflecting the recent increase in global energy prices.”
Warsh has promised “regime change” at the central bank and may make sweeping changes to its economic models, communications strategies and balance sheet, but he will likely find it harder to implement the rate cuts Trump seeks with inflation topping 3%, above the Fed’s target of 2%.
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