The US Federal Reserve maintained its benchmark overnight borrowing rate in a range of 3.5%-3.75%. The decision to keep rates unchanged was supported by nine voting members, while three members dissented, resulting in a 9 to 3 vote.
The dissenting members were Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari, and Dallas Fed President Lorie Logan. These three officials had also voted for interest rate increases during the April meeting.
The amount by which dissenting members wanted the policy rate to be increased.
Inflation has remained above the US Federal Reserve's 2% objective for more than five years.
Arguments for tighter policy
Cleveland Fed President Beth Hammack argued that the Federal Open Market Committee (FOMC) should act to accelerate inflation's return to the 2% target. Hammack noted that price pressures were emerging from the demand side of the economy and that businesses in the Cleveland Fed district reported broadening pricing pressures.
Hammack also pointed to various supply shocks as factors helping to drive up inflation.
Minneapolis Fed President Neel Kashkari argued that a series of small rate hikes would be preferable to delaying action and potentially having to take more aggressive steps later. He stated that he would prefer to tighten monetary policy gradually as more data on inflation and employment is collected.
Kashkari noted that the economy maintains a strong outlook due to a low unemployment rate and stated that monetary policy could play an important role even when inflation is driven by supply shocks. He also identified various supply shocks as factors helping to drive up inflation.
