Federal Reserve Leaves Interest Rates Unchanged

The Federal Reserve left its interest rate target unchanged on Wednesday. The central bank's decision was made despite significant internal dissent from officials who preferred to raise rates. Three members of the policy-setting Federal Open Market Committee, including Cleveland Fed president Beth Hammack, Minneapolis Fed president Neel Kashkari, and Dallas Fed president Lorie Logan, favored a quarter-point rate hike.

The committee left its target range for the federal funds rate between 3.5% and 3.75%, where it has stood since December. The post-meeting policy statement noted that economic activity is expanding at a solid pace despite elevated uncertainty. The statement was virtually unchanged from the last meeting, offering no clues as to whether or in what circumstances the committee might raise rates later this year.

The decision was widely anticipated by Fed watchers, and financial markets had priced it in as the most likely result of the meeting. However, there were rumblings in the last 10 days that persistently high inflation combined with a resurgence in energy prices might prompt a rate hike. The Commerce Department is set to release June income and spending data on Thursday, which is expected to show the Personal Consumption Expenditures Price Index was up 3.7% over the last 12 months.