MercoPress. South Atlantic News Agency

Fed holds rates for fifth straight meeting as three officials push for a hike

It was the second meeting chaired by Kevin Warsh, who took over the central bank in May

The US Federal Reserve left interest rates unchanged on Wednesday in a range of 3.5% to 3.75%, the fifth consecutive meeting without a move, in a decision that exposed an unusual internal split and left the door open to tightening in September.

The vote was nine to three. Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari and Dallas Fed President Lorie Logan each favored raising the benchmark rate by a quarter of a percentage point. According to CNN, that is the largest number of dissents in the opposite direction from the majority decision since September 2016.

It was the second meeting chaired by Kevin Warsh, who took over the central bank in May. In a statement markedly shorter than those issued before his arrival, the Federal Open Market Committee said economic activity is expanding at a solid pace and acknowledged that inflation remains above the 2% target, partly reflecting supply disruptions that have pushed up prices in certain sectors, including energy. The committee said it would deliver price stability, without specifying how.

At the news conference that followed, Warsh described the decision to wait as especially prudent at an uncertain time and ruled out any softening of the official goal. The Fed chair insisted there is no flexible or implicit inflation target, and that the committee's only reference point is 2%. Testifying before the Senate this month, he had said elevated inflation has been an undue burden on American households and businesses.

Price pressure is coming mainly from energy. Brent crude is up roughly 38% in 2026 because of restricted transit through the Strait of Hormuz stemming from the US-Iran conflict, and it climbed again on Wednesday to around US$86 a barrel after US and Jordanian forces intercepted another Iranian missile barrage. The average gallon of gasoline in the United States stood at US$4.09.

Ahead of the meeting, futures markets assigned roughly a one-in-three probability to a July increase and close to 80% to one in September. The June projections showed nine of eighteen officials penciling in at least one hike this year.

US inflation has run above the central bank's target for more than five years. The Fed has not adjusted rates so far in 2026, after cutting them in September, October and December 2025.