Fed keeps interest rates steady despite dissenting FOMC voices

The Federal Reserve maintained its strategy of keeping its policy rate steady at 3.5% to 3.75% Wednesday in the central bank’s second meeting with Kevin Warsh as chair.

Advisors and investors have been closely watching the Fed for any hints as to a shift in policy. Wednesday’s decision marks the fifth consecutive meeting with no change since the Federal Reserve made its last rate cut in December 2025. Warsh took office as Fed Chair on May 22.

In a statement, the Federal Open Market Committee said that it approved Wednesday's decision by a 9-3 vote. Committee members Beth M. Hammack, Neel Kashkari, and Lorie K. Logan voted against the policy, and preferred to raise the target range for the federal funds rate by 1/4 of a percentage point.

In contrast, the decision at the last FOMC meeting was approved by a 12-0 vote.

“Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East,” the FOMC said, in the statement accompanying Wednesday's decision, also noting that productivity growth and capital investment are strong. “Job gains have kept pace with the workforce, and the unemployment rate has changed little,” the Committee added.

The FOMC noted that inflation remains elevated relative to its 2% goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy.

The unchanged stance on rates was hardly out of the blue. In the buildup to the decision, several observers had predicted that the Fed would continue on its recent path of holding interest rates steady.

Melissa Cohn, regional vice president of William Raveis Mortgage said that the Fed made the correct move Wednesday. “With oil prices see-sawing, inflation data more subdued and employment hanging tough, doing nothing was the best course of action," she said, in a note released after the decision. "That doesn’t mean that a rate hike is off the table in September. The answer to that will be in the data over the next two months.”

The latest Fed decision can be characterized as a "hawkish hold," according to Daniel Siluk, head of global short duration & liquidity and portfolio manager at Janus Henderson Investors. "The statement was essentially unchanged, growth and inflation language remained firm, and the three dissents in favor of a hike underscore that a meaningful faction of the Committee remains concerned about inflation," he said.