The Fed’s decision Wednesday leaves its key short-term rate at about 4.3%, where it has stood after the central bank made three cuts last year.
There were some signs of splits in the Fed’s ranks: Governors Christopher Waller and Michelle Bowman voted to reduce borrowing costs, while 9 officials, including Powell, favored standing pat. It is the first time in more than three decades that two of the seven Washington-based governors have dissented. One official, Governor Adriana Kugler, was absent and didn’t vote.
The dissents could be a preview of what might happen after Powell steps down, if President Donald Trump appoints a replacement who pushes for the much lower interest rates the White House desires. Other Fed officials could push back if a future chair sought to cut rates by more than economic conditions would otherwise support.
Overall, the committee’s quarterly forecasts in June suggested the Fed would cut twice this year. There are only three more Fed policy meetings — in September, October, and December — and some economists forecast that a cut will occur in September. Wall Street investors also expect cuts in September and December, according to futures pricing.
A Fed rate cut usually results in lower borrowing costs for mortgages, auto loans and credit cards.
