4 Fed Members Send Jerome Powell Out To Pasture By Bucking Him On Final Interest Rate Decision

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.