The Federal Reserve, as anticipated by markets, maintained interest rates unchanged for the third consecutive meeting. Dissent against the policy statement grew significantly, with four officials objecting compared to one at the previous meeting. Among the dissenters, Governor Stephen Miran voted for a 25-basis-point rate cut, while three regional Fed presidents supported holding rates steady but opposed the statement's retention of an easing bias. The policy statement reiterated the Committee's readiness to adjust the stance of monetary policy as appropriate. The statement removed a previous phrase stating that "the implications of Middle East developments for the U.S. economy remain uncertain," replacing it with language noting that Middle East developments are "adding to the高度不确定性 surrounding the economic outlook." A new sentence was added, attributing elevated inflation partly to recent increases in global energy prices. A prominent Fed watcher characterized the meeting as exposing a deep internal divide over whether to signal potential future rate cuts.
At what is expected to be Chair Jerome Powell's final Federal Open Market Committee (FOMC) meeting, the central bank held policy steady but revealed a significant escalation in internal disagreements. Some officials questioned the continued suggestion that further rate cuts are more likely than hikes. Following the meeting on April 29, the FOMC announced it would maintain the target range for the federal funds rate at 3.50% to 3.75%. This marks the third consecutive pause after a series of rate cuts concluded at the end of last year, with no policy changes throughout 2026 so far. The decision was fully anticipated. Market pricing indicated a 100% probability of no rate change at this meeting, a roughly 97% chance of no action at the June meeting, and only a 21.9% probability of a cut by December. Similar to the previous meeting, Governor Stephen Miran dissented in favor of a rate cut. However, unlike last time, he was joined by three other voting FOMC members who objected to the statement's perceived accommodative bias. The result signifies that eight members, including Powell, supported the policy statement, while four opposed it. This level of dissent, with four officials voting against the statement, represents the highest number of dissents at an FOMC meeting since 1992.
The dissent foreshadows the potential for "messy meetings" and "internal debates" anticipated by the nominee for the next Fed Chair, Kevin Warsh, during his recent confirmation hearing. This division highlights the policy challenges the next Chair may face as the Fed navigates new inflation risks stemming from energy price shocks.
**Dissenters: Governor Miran Favors Cut, Three Presidents Oppose Easing Bias** The most notable change from the March statement was the increase in dissenting votes from one to four. The voting record showed that Governor Stephen Miran dissented again because he preferred to lower the target range by 25 basis points. Miran has consistently dissented since joining the Board, initially favoring larger cuts last year and advocating for a 25-basis-point reduction in all three meetings this year. The other three dissenters were regional Fed presidents with voting rights this year: Cleveland's Beth Hammack, Minneapolis's Neel Kashkari, and Dallas's Lorie Logan. Their stance differed from Miran's; they "supported maintaining the target range for the federal funds rate but did not support the language in the statement indicating an easing bias." This outcome reveals a divergence in two distinct directions: Miran continues to argue for lower rates, while the three other dissenters oppose retaining the so-called "easing bias," which has implied for the past two years that rate cuts are more likely than hikes. The statement's wording itself does not explicitly state an easing bias or directly mention rate cuts. It repeats the previous formulation: "The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals." However, the three regional Fed presidents viewed this phrasing as indicative of an easing bias.
**Revised Language: Middle East Developments Heighten Uncertainty** The primary revisions concerning economic assessment related to the impact of conflict in the Middle East. The previous statement's line that "the implications of Middle East developments for the U.S. economy remain uncertain" was removed. The description of "uncertainty surrounding the economic outlook" was amended to state that Middle East developments are "adding to the高度不确定性 surrounding the economic outlook." This revised sentence follows the standard reaffirmation of the Committee's commitment to its dual mandate and precedes the standard line about monitoring risks.
**New Addition: High Inflation Partly Attributed to Energy Prices** Other adjustments to the economic assessment were minor. Instead of reiterating that inflation remains elevated, the statement added a new explanation: "Inflation remains elevated, reflecting in part the recent increases in global energy prices." Regarding employment, the statement added a qualifier, noting that "on average, job gains have remained moderate." The description of economic activity was tweaked from "available indicators suggest that economic activity has been expanding at a solid pace" to "recent indicators suggest that economic activity has been expanding at a solid pace." The statement retained the observation that the unemployment rate has remained low in recent months. The statement contained no mention of balance sheet operations, indicating that the New York Fed's Reserve Management Purchases (RMP) are proceeding according to the recent schedule. The RMP program, initiated in December to maintain ample reserves, has seen its purchase size reduced. The latest monthly cycle involves purchases of $25 billion, nearly 40% less than the initial $40 billion program.
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