Four committee members dissented Wednesday from the Federal Reserve’s statement to keep the central bank’s benchmark interest rate unchanged, marking the highest level of opposition since 1992 as Chairman Jerome Powell is set to be replaced.
Powell led his final Federal Open Market Committee (FOMC) meeting as chairman, with the FOMC deciding to leave its benchmark federal funds rate at a range of 3.5% to 3.75%. Four members — including Fed Governor Stephen Miran, Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari and Dallas Fed President Lorie Logan — dissented from the FOMC decision, with only Miran wanting to cut rates, while the other three objected to language included in the FOMC’s statement.
Hammack, Kashkari and Logan objected to the FOMC statement that added language to indicate further rate cuts could be forthcoming. This concerned the three because they had previously expressed concerns about inflation remaining stubborn. During times of inflation, monetary theory often calls for central banks to raise interest rates to rein in the money supply, hoping the move would lower inflation.
The sentence in question added to the FOMC statement said the following: “In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks.”
The sentence was interpreted to mean the FOMC would likely lower interest rates in future meetings, which could put the Fed in a tough bind given inflation has skyrocketed following the Feb. 28 launch of Operation Epic Fury in Iran. This launch caused energy prices to spike, further straining consumers already dealing with persistent inflation.
Miran, as he had done in past FOMC meetings, advocated for a quarter point interest rate decrease. The last time four members dissented from the FOMC statement was in October 1992.
Powell made news following the FOMC statement’s release, saying during a press conference that he would remain on the Fed’s Board of Governors until an inspector general report into questions about cost overruns for the Fed’s headquarters was completed, according to CNBC.
Powell appeared likely to be replaced by former Fed Governor Kevin Warsh, who cleared a key procedural vote in the Senate Banking Committee Wednesday and received the backing of a former holdout, Republican North Carolina Sen. Thom Tillis Sunday. Tillis’s objection to Warsh’s nomination became moot after U.S. Attorney for Washington, D.C., Jeanine Pirro dropped the DOJ’s investigation into the Fed’s renovation.
President Donald Trump clashed publicly with Powell, accusing the Fed chairman of not lowering interest rates quickly enough and also for his alleged role in cost overruns for the Fed’s headquarters renovations.
Inflation spiked again in March under Trump’s presidency, buoyed by supply chain disruptions caused by the war in Iran. The consumer price index increased 0.9% in March, pushing the annual inflation rate to 3.3%, largely due to a 10.9% spike in energy costs resulting from the war in Iran.
The annual rate reading was the largest recorded since April 2024 and increased from 2.4% in February, CNBC reported. Gasoline prices increased 21.2% in March as the Strait of Hormuz, a major route for shipping oil, remained largely closed due to U.S. and Iran blockades, accounting for three-quarters of the inflation increase.
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