Read the vote, not the decision.
The Federal Open Market Committee held the federal funds target range at 3.50 to 3.75 percent on Wednesday [1]. That is the headline, and it is the least informative part of the statement.
The vote was nine to three.
Beth Hammack, Neel Kashkari and Lorie Logan each dissented, and each preferred to raise the range by a quarter point [1].
Dissents at the Fed are not rare. Three dissents pointing the same direction are - and it means a quarter of the voting committee believes the Committee is not done tightening, in a year when the consensus expectation has been that the next move would be a cut.
The statement's own language explains their case.
Inflation 'remains elevated relative to the Committee's 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy' [1].
That is the Fed writing down that prices are being pushed by supply rather than demand - which is the hardest kind of inflation for interest rates to reach. Raising rates cools borrowing. It does not reopen a strait or refill a pipeline.
The labour half is why the majority could hold anyway: 'Job gains have kept pace with the workforce, and the unemployment rate has changed little' [1]. No deterioration to protect against, so no urgency to cut.
Read together: a committee with elevated inflation it partly blames on supply, a labour market neither breaking nor booming, and three members who think the answer is to go higher anyway.
There is no Summary of Economic Projections at this meeting, which removes the usual way of reading where the committee thinks it is going. The dissent count is what is left. Going in, markets had priced roughly a 30 percent chance of a hike [2].
What this newsroom will not do is tell you what happens in September. The honest read of a 9-3 statement with no projections is that the committee itself is not agreed - and anyone claiming to know the path is reading something the Fed did not publish.
