Fed leaves rates steady but policymakers split over inflation risks

The Federal Reserve left interest rates unchanged at 3.5% to 3.75% during Kevin Warsh’s second FOMC meeting, but the decision revealed a growing divide among policymakers over how to respond to persistent inflation. The Federal Open Market Committee voted 9-3 to maintain its current policy stance, with three officials, including Beth Hammack, Neel Kashkari, and Lorie Logan, favoring a 25-basis-point rate increase. The majority of policymakers pointed to a resilient US economy, citing solid growth, strong productivity gains, and continued capital investment despite elevated uncertainty linked partly to the conflict in the Middle East. The Fed also described the labor market as stable, noting that job gains have kept pace with workforce growth and unemployment has changed little. However, officials warned that inflation remains above their 2% goal, with supply shocks contributing to higher prices in areas such as energy. Bitcoin appeared to have already priced in the Fed’s decision before it was announced. The flagship crypto asset pushed to $64,000 in the minutes leading up to the statement and was trading near $64,500 at press time. President Donald Trump selected Warsh to lead the...