The Federal Reserve yesterday held interest rates steady at 4.25% to 4.5%, as widely expected by economists and financial observers. Two members of the Fed’s Board of Governors, Christopher J. Waller and Michelle W. Bowman, dissented in support of lowering rates by a quarter of a percentage point, The New York Times reported.
The last time such high-ranking policy members dissented from the Fed’s decision was in 1993, The New York Times article said. The dissent is a sign of policy disagreement between the central bank and its chief, Jerome Powell, and President Trump, who has made clear he wants rates lowered. Both dissenting voters were appointed by Trump.
In future decisions, the Fed faces uncertainty about whether the labor market will remain solid and whether tariffs will increase inflation. The Times reported that in the press conference following the release of the Fed’s decision, Powell was repeatedly asked about the chances of a September rate cut. He did not take such a move off the table but said that the economic data to be released between now and the mid-September meeting would be crucial.
Economic data released earlier Wednesday explained the Fed’s caution in lowering rates, an article in The Wall Street Journal suggested: “While second-quarter GDP growth topped expectations at 3%, a measure of private business and consumer demand continued decelerating to 1.2% from 1.9% in the previous quarter and 2.9% late last year.”
The Journal story said that economists attributed the slowdown to diminished labor force growth and tariff impacts.
