Fed Holds Rates at 3.75%-4% as Two Officials Dissent in Favor of a Hike

The Federal Reserve kept its benchmark rate unchanged at 3.75%-4% on Wednesday, with two FOMC members dissenting in favor of a quarter-point increase. Governors Lisa Cook and Cleveland Fed President Beth Hammack backed raising rates by 0.25 percentage points. In its statement, the Fed said inflation "remains elevated" and that accumulating more information will help the committee determine the appropriate policy stance to return inflation to its 2% target. Chair Kevin Warsh said the Fed will reduce the number of rate-setting meetings, with one annual meeting from 2027 dedicated to broad monetary policy strategy rather than a rate vote, and two such meetings expected by 2028. Warsh said discussions centered on price stability, calling employment "quite positive," citing a decline in the unemployment rate and four-week average jobless claims at multi-generational lows. He noted GDP growth for the first half was revised up to 2.4% from 1.8%. Warsh said higher rates are affecting AI infrastructure buildout, with credit spreads widening in some assets, though he said capex trends remain strong and broadening. He reiterated his opposition to forward guidance outside emergencies.