The Fed’s decision to hold interest rates steady helps Warsh deny Tehran a say over monetary policy
Source: Fortune ·
The seemingly at-odds data and consensus policy response are essentially a geography problem: The key source of the FOMC's inflation headache lies in the Middle East.
From the source
Federal Reserve Chairman Kevin Warsh has talked tough on inflation since returning to the central bank this spring. And yet, despite prices rising comfortably ahead of target in recent months, the Federal Open Market Committee (FOMC)—led by Warsh—appears to be taking its foot off the gas in terms of raising interest rates.Yesterday, the boomerang board member confirmed that the Federal Funds Rate would be held steady at 3.75% to 4%. Two voting members disagreed with the hold: Governor Lisa Cook and Beth Hammack, president of the Federal Reserve Bank of Cleveland, dissented in favor of a 25bps hike.The seemingly at-odds inflation data and the passive, consensus rate response are essentially a geography problem: The key source of the FOMC’s inflation headache lies in the Middle East. Over the past half a year, inflation has been far above the Fed’s mandated 2% target. That is despite Warsh insisting that it is the Fed’s “charge to keep” inflation at, or toward, the target. But…