The Fed held rates, and three of its twelve voters wanted a rise, against none in June
The Fed held rates. It is the vote underneath that is worth reading.
The Federal Open Market Committee kept the target range for the federal funds rate at 3-1/2 to 3-3/4 percent on Wednesday, in a statement released at 2:00 p.m. Eastern and approved by nine votes to three. Beth M. Hammack, Neel Kashkari and Lorie K. Logan voted against. All three, the statement records, preferred to raise the target range by a quarter of a percentage point at this meeting.
In June the same committee approved the same decision 12 to 0.
That is the whole of the news, and it is best seen by setting the two documents side by side. The three paragraphs of economic assessment in Wednesday's statement are identical to June's, word for word. Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East. Productivity growth and capital investment are strong. Job gains have kept pace with the workforce and the unemployment rate has changed little. Inflation remains elevated relative to the 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy.
One phrase changed. In June the Committee reaffirmed its policy of maintaining ample reserves in the banking system. In July it is continuing that policy. Whether anything hangs on the difference between reaffirming and continuing is not something the statement says, and this desk is not going to invent a meaning for two words.
So the Committee's published description of the economy did not move at all between the two meetings, and three votes did. The statement gives the dissenters' preferred alternative and no reasoning for it, which is the normal form. Reasoning, if it appears anywhere, appears in the minutes.
The last sentence of the inflation paragraph is the one that survived unchanged into a meeting with three hawkish dissents. The Committee will deliver price stability. It has now said that twice while holding, and once with a quarter of its voters on the record wanting to tighten.
Three dissents is a large number for this committee, and readers should be careful with what that observation supports. It is a fact about this statement compared with the last one. It is not evidence of what happens in September, and nothing in the document forecasts the next decision. The Summary of Economic Projections arrives with that meeting, on September 15 and 16.
