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\n\t\t \u201cInflation is elevated, in part reflecting the recent increase in global energy prices.\u201d In part. And in part for other reasons.
\nBy\u00a0Wolf Richter\u00a0for\u00a0WOLF STREET.
\nThe FOMC voted today to leave the Fed\u2019s five policy rates unchanged for the third meeting in a row, following three rate cuts in 2025 of 75 basis points combined, and three cuts of 100 basis points combined in 2024.
\nThere were four dissents, the most since 1992: Miran dissented because he wanted a 25-basis point rate cut. Three others \u2013 Hammack, Kashkari, and Logan \u2013 dissented though they supported maintaining the target range at this meeting, but \u201cdid not support inclusion of an easing bias in the statement at this time.\u201d They wanted a symmetrical statement, that indicated that the next move could be either a rate cut or a rate hike.
\nThis concept that the next move could be either a cut or a hike was already discussed at the last meeting, as we know from the last press conference and meeting minutes. Now it made it into the statement.
\nLet there be dissents \u2013 they\u2019re a breath of fresh air.
\nThe FOMC left its five policy rates unchanged today:<\/p>\n
Target range for the federal funds rate: 3.5%-3.75%.
\nInterest it pays the banks on reserve balances (IORB): 3.65%.
\nInterest it pays on overnight Reverse Repos (ON RRPs): 3.50%
\nInterest it charges on overnight Repos at its Standing Repo Facility (SRF): 3.75%.
\nInterest it charges banks to borrow at the \u201cDiscount Window\u201d at 3.75%.<\/p>\n
Major changes in the statement:
\nThe statement was primarily worried about inflation, and less worried about the economy and labor market. That shift had taken place at the last meeting and was further clarified in this meeting:
\nNew: \u201cRecent indicators suggest that economic activity has been expanding at a solid pace.\u201d.
\nOld:\u00a0\u201cAvailable indicators suggest that economic activity has been expanding at a solid pace.\u201d
\nNew: \u201cJob gains have remained low, on average, and the unemployment rate has been little changed in recent months.\u201d
\nOld:\u00a0\u201cJob gains have remained low, and the unemployment rate has been little changed in recent months.\u201d
\nNew: \u201cInflation is elevated, in part reflecting the recent increase in global energy prices.\u201d
\nOld:\u00a0\u201cInflation remains somewhat elevated.\u201d
\nNew: \u201cDevelopments in the Middle East are contributing to a high level of uncertainty about the economic outlook.\u201d
\nOld:\u00a0\u201cUncertainty about the economic outlook remains elevated. The implications of developments in the Middle East for the U.S. economy are uncertain.\u201d
\nThis sentence was unchanged: \u201cThe Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee\u2019s goals.\u201d
\nAnd this sentence was unchanged: \u201cThe Committee is attentive to the risks to both sides of its dual mandate.\u201d
\nThis was a no-dot-plot meeting \u2013\u00a0one of the four a year when the FOMC does not release a \u201cSummary of Economic Projections,\u201d which includes the \u201cdot plot\u201d that indicates how each FOMC member that day sees the development of future policy rates, inflation, GDP growth, and unemployment. The FOMC will release the next Summary of Economic Projections at the June meeting.
\nAnd here is Powell at the press conference: Regime Change: Powell, Chair of Mega-QE & \u201cAmple Reserves Regime,\u201d to Be Replaced by Warsh, who Wants a Smaller Balance Sheet<\/p>\n
The whole statement:
\n\u201cRecent indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained low, on average, and the unemployment rate has been little changed in recent months. Inflation is elevated, in part reflecting the recent increase in global energy prices.
\nThe Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Developments in the Middle East are contributing to a high level of uncertainty about the economic outlook. The Committee is attentive to the risks to both sides of its dual mandate.
\nIn support of its goals, the Committee decided to maintain the target range for the federal funds rate at 3\u20111\/2 to 3\u20113\/4 percent. In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.
\nIn assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee\u2019s goals. The Committee\u2019s assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.
\nVoting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Lisa D. Cook; Philip N. Jefferson; Anna Paulson; and Christopher J. Waller. Voting against this action were Stephen I. Miran, who preferred to lower the target range for the federal funds rate by 1\/4 percentage point at this meeting; and Beth M. Hammack, Neel Kashkari, and Lorie K. Logan, who supported maintaining the target range for the federal funds rate but did not support inclusion of an easing bias in the statement at this time.\u201d
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