On July 29, the Federal Open Market Committee voted to maintain the target range for the federal funds rate at 3-1/2 to 3-3/4 percent [1][2]. The vote was 9 to 3. None of the three dissenters wanted a cut. Each of them preferred to raise the range by a quarter of a percentage point [1].
That is the record, and it runs against the story markets have been telling themselves. A large share of commentary frames the Fed's next move as a rate cut, with the only open question being when. The Committee's own statement describes a different argument. When nine members hold and three push to hike, the live disagreement is between standing still and tightening further, not between standing still and easing.
Inflation is the reason the hawks are still in the room. Consumer prices rose at a 3.40 percent annual rate in July, down from 3.50 percent in June, according to Trading Economics; the core rate, which strips out food and energy, eased to 2.5 percent from 2.6 percent [3]. Both readings sit above 2 percent. The FOMC put the point in its own words, describing the measure it formally targets: 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].
The case for expecting cuts is not baseless. Inflation has been drifting down, from 3.50 to 3.40 percent on the headline measure and from 2.6 to 2.5 percent on the core, and a central bank that sees prices cooling often eases to keep from choking off growth [3]. That is the narrative worth testing against the vote. What the July meeting shows is a Committee that looked at the same cooling and still held, with three members arguing the cooling had not gone far enough to stop worrying about it [1].
The three dissents came from the Cleveland Fed's Hammack, the Minneapolis Fed's Kashkari, and the Dallas Fed's Logan, each of whom preferred to raise the target range by a quarter point [1]. For a fifth straight meeting, the Committee left the range where it operates [1][2]. A hold repeated five times, defended against three colleagues who wanted to go higher, is not a body inching toward relief for borrowers.
Kevin Warsh, confirmed as Fed chair, is due to give his first Jackson Hole keynote as chair later this month, at a symposium where chairs have historically signaled the direction of policy. Anyone listening for a turn toward cuts will be listening against a July record that shows the opposite pressure inside the room.
The cost of reading this backward falls on households. A family that budgets for cheaper credit because it has been told cuts are coming plans around a rate that has not moved and, on the current vote count, carries more risk of rising than falling. With prices still climbing 3.4 percent a year, a premature bet on easier money can mean carrying variable-rate debt longer, or reaching for a mortgage on the assumption of a refinance the Committee has given no vote to deliver. The direction of rates is a forecast anyone can make; the honest version of it starts from the ballots that were actually cast.
