The Federal Reserve Holds Interest Rate at 3.75%

The Federal Reserve Holds Interest Rate at 3.75% as expected, with the Federal Open Market Committee split 8-4 in favour of the decision. Some key takeaways from what may be Chair Jermone Powell’s final meeting at the helm:

• The Federal Open Market Committee voted 8-4 to keep the benchmark federal funds rate anchored in a range between 3.5%-3.75%

• Governor Miran dissented in favour of a quarter percentage point cut, and the three others (Hammack, Kashkari and Logan) said they agreed with the hold but “did not support the inclusion of an easing bias in the statement at this time.”

• The FOMC said in its policy statement "Inflation is elevated, in part reflecting the recent increase in global energy prices," 

• Alongside elevated inflation, the FOMC stated the unemployment rate has been little changed in recent months" while the economy continues to expand "at a solid pace,"

• Earlier on Wednesday, the Republican-controlled Senate Banking Committee voted to advance Warsh's nomination on a party-line 13-11 vote. The Senate is expected to confirm Warsh next month.

• Chair Powell will remain a member of the Board of Governors for an indefinite period.

• The FOMC will continue to monitor the geopolitical landscape and are ready to act in accordance with incoming data. However, some uncertainty remains with a new incoming Chair in the coming months.

The next FOMC rate decision will be June 17th