Two Officials, Including Lisa Cook, Dissent as Fed Holds Rates Steady Despite Lack of Progress on Inflation

Fed keeps rates unchanged

The central bank left interest rates steady despite little recent progress toward bringing inflation down to its 2 percent target. The decision came shortly before midterm elections, with affordability a central concern for voters after nearly six years of inflation above the Fed’s goal.

Cook and Beth M. Hammack, president of the Federal Reserve Bank of Cleveland, dissented in favor of raising rates by a quarter point. It was Cook’s first dissent on monetary policy; Hammack has dissented repeatedly this year. Cook is contesting President Trump’s effort to fire her.

Warsh weighs growth and prices

At a news conference, Warsh described the economy in upbeat terms but said inflation remained too high. He has made reducing inflation the leading priority of his four-year term, which began in May.

One meeting set aside

Warsh said the Fed will meet eight times next year, as usual, but will vote on interest rates at seven of those meetings. The remaining meeting will focus on broad monetary policy strategy.

Warsh said policymakers need regular opportunities to assess economic developments and also need time for strategic discussion. Some economists have argued that more time between meetings can help officials identify meaningful economic changes; the Fed can still call emergency meetings if needed.

Markets and political backdrop

The S&P 500 finished 0.3 percent higher after trading fluctuated during Warsh’s remarks. Expectations of lower rates are usually supportive of stock prices. The Fed’s decision came amid a political dispute over Cook’s position. After the Supreme Court ruled against Trump on the matter earlier this year, the White House began an investigation into Cook and summoned her to an in-person hearing.