Inflation has been too high for too long, and the Federal Reserve should not count on it fading without further action. - That is the argument from the three Fed officials who dissented from the decision led by chairman Kevin Warsh to leave interest rates unchanged this week, preferring instead to raise them. Why it matters: Together, the dissents lay out a blueprint for the Fed's hawkish wing, arguing that repeated supply shocks paired with resilient demand have made inflation too persistent to fade on its own without tighter monetary policy. - The question in the months ahead is whether that argument persuades more policymakers, especially if inflation remains stubborn. - It is worth watching whether they turn out to have momentum…
The Federal Reserve left its interest rate target unchanged Wednesday amid significant internal dissent from officials who preferred to raise rates. The big picture: The central bank elected not to surprise markets with an interest rate hike, contrary to rampant speculation on Wall Street in recent days. But three members of the policy-setting Federal Open Market Committee did favor raising the cost of borrowing. - Cleveland Fed president Beth Hammack, Minneapolis Fed president Neel Kashkari, and Dallas Fed president Lorie Logan preferred a quarter-point rate hike, with the other nine officials, including chairman Kevin Warsh, voting to stand pat. Driving the news: The committee left its target range for the federal funds rate between…
Federal Reserve chairman Kevin Warsh testified before Congress over two days last week, totaling more than five hours. Yet it was comments from several of his colleagues that gave the clearest picture of what the central bank is likely to do at next week's policy meeting. Why it matters: It is a central paradox of Warsh's communications strategy. He is determined to get out of the business of giving markets and the public much guidance on future policy , which means the markets fill in the gaps based on comments from other officials. - That isn't necessarily a bad thing — it preserves flexibility on interest rate policy that was diminished when former Fed chiefs all but preannounced upcoming rate moves. - But it also means that Warsh…