The Federal Reserve held interest rates unchanged at 3.50%–3.75% following its July meeting. Three of the 12 voting policymakers preferred a quarter-percentage-point hike. Fed Chair Kevin Warsh described the internal debate as a “real family fight” and committed to returning inflation to the 2% target. The Fed noted that economic activity is “expanding at a solid pace” and job gains have kept pace with the workforce. Wall Street reacted negatively: the Dow fell 1,153 points while the 30-year Treasury yield hit its highest level since 2007. The S&P 500 declined 1.52% and the Nasdaq dropped 1.74%, the latter now down about 9.8% from its early summer record and nearing a correction. Mortgage rates in the U.S. had already spiked to highs not seen in nearly a year.
The Federal Reserve decided to leave interest rates unchanged at 3.50%–3.75% after its latest meeting on Wednesday. Out of the 12 voting policymakers, three “preferred” a quarter-percentage-point hike.
During a press conference, Fed Chair Kevin Warsh praised policymakers for engaging in a “real family fight” and affirmed that the Fed will not waver. “This Fed will not waver,” he said.
Warsh also stated: “I wouldn’t characterize what we did as anything like a pause. I would characterize what we did as a rigorous review of the economic situation.” The Fed’s statement noted that economic activity is “expanding at a solid pace” and that job gains “have kept pace with the workforce, and the unemployment rate has changed little.”
Wall Street indexes fell sharply following the decision, with the Dow sinking by 1,153 points. The 30-year Treasury yield reached its highest level since 2007 amid investor concerns over stubborn inflation.
The S&P 500 sank 1.52%, while the tech-heavy Nasdaq dropped 1.74%. The Nasdaq is now about 9.8% below its record high in early June, placing it near correction territory. Mortgage rates in the U.S. also spiked to highs not seen in almost a year.
