Washington: The US Federal Reserve kept its benchmark federal funds rate unchanged Wednesday between a target range of 3.5% - 3.75%, as policymakers weighed persistent inflation, rising energy prices, and heightened uncertainty from developments in the Middle East.
According to Anadolu Agency, the decision was widely anticipated but came with an unusual level of disagreement among policymakers, as the Federal Open Market Committee (FOMC) was split 8-4. This marked the highest level of dissent at a Fed policy meeting since October 1992, when four FOMC members also dissented.
The Fed indicated that recent indicators suggest economic activity has been expanding at a solid pace, while job gains have remained low on average, and the unemployment rate has seen little change in recent months. "Inflation is elevated, in part reflecting the recent increase in global energy prices," the central bank stated.
The Fed acknowledged that developments in the Middle East are contributing to a high level of uncertainty about the economic outlook, emphasizing that the committee remains attentive to risks affecting both sides of its dual mandate. The FOMC aims for maximum employment and inflation at a rate of 2% in the longer run.
In regard to future rate adjustments, the Committee mentioned that it will carefully assess incoming data, the evolving outlook, and the balance of risks. The central bank reaffirmed its commitment to supporting maximum employment and returning inflation to its 2% objective.
Voting for the monetary policy action were Fed Chair Jerome Powell, Vice Chair John Williams, Michael Barr, Michelle Bowman, Lisa Cook, Philip Jefferson, Anna Paulson, and Christopher Waller. Stephen Miran voted against the decision, preferring a 25 basis-point rate cut. Beth Hammack, Neel Kashkari, and Lorie Logan also dissented, supporting the decision to hold rates steady but objecting to language in the statement that signaled possible future easing.
The split highlighted divisions within the Fed regarding how to address elevated inflation and the risk that higher global energy prices might sustain price pressures above the central bank's target for a longer period.