The Federal Reserve held the target range for the federal funds rate at 3-1/2 to 3-3/4 percent on Wednesday, in what will be the last policy meeting chaired by Jerome Powell. The Federal Open Market Committee voted 8-4 to keep policy unchanged, marking the most divided FOMC decision since 1992.
The dissenters split in opposite directions on the appropriate policy stance. Governor Stephen Miran dissented in favour of an immediate 25 basis point cut, while Beth Hammack, Neel Kashkari and Lorie Logan objected to the inclusion of an easing bias in the accompanying statement. The result is a Committee that is publicly divided both on the level of rates and on the direction of the guidance.
MOST DIVIDED VOTE IN A GENERATION
The last time an FOMC decision produced this level of dissent was in 1992.
The statement cited elevated inflation, partly attributable to higher global energy prices, and said developments in the Middle East were contributing to a high level of uncertainty about the economic outlook.
The three other dissenters took the opposite line, objecting not to the level of rates but to language that they viewed as tilting the guidance too far toward easing.
END OF THE POWELL ERA
The meeting closes Mr Powell's tenure as chair, which has spanned the pandemic-era emergency easing, one of the fastest tightening cycles in Fed history and the current phase of managing rates against a backdrop of geopolitical shocks. His successor will inherit a Committee whose latest decision drew the most dissents since 1992.
Mr Powell said after the meeting that he would remain on the Board of Governors after his term as chair ends.
The statement did not offer explicit calendar guidance on the next policy move.
Bank news that matters, every weekday.
Follow The Global Banker on LinkedIn