The Federal Reserve kept its policy interest rate unchanged at 3.50–3.75 percent at its July monetary policy meeting. The decision was made with a 9-3 vote, with three Fed officials voting for an interest rate increase, indicating a strengthening demand for tighter monetary policy within the bank.
Beth Hammack, Neel Kashkari, and Lorie Logan, who opposed the Federal Open Market Committee’s (FOMC) decision, opted for a 25 basis point increase in the policy rate. While there were no significant changes to the policy statement compared to the June text, the fact that the three members called for an interest rate increase highlighted the hawkish stance of the decision.
The Fed stated that economic activity in the U.S. economy continues to grow at a strong pace, while inflation remains above the 2% target, partly due to the impact of recent shocks.
The statement noted that employment growth was in line with labor supply and that there was no significant change in the unemployment rate. It also emphasized that productivity growth and capital investment remained strong.
The Fed reiterated that it will continue to maintain sufficient levels of reserves in the banking system. The FOMC stated that it will continue to closely monitor economic data and risks in line with its goals of price stability and maximum employment.
*This is not investment advice.