Another hold
The Federal Reserve kept interest rates unchanged on Wednesday, the fifth straight meeting without a move. The decision matched what most investors expected, but the vote was not as smooth as it looked.
Several officials dissented. They argued that inflation is still running too hot and that waiting longer risks letting price increases become a permanent feature of the economy. The dissent was the strongest of Kevin Warsh's second meeting as Fed chair, and the vote breakdown was the most divided of his time at the helm.
Dissent grows
The internal split reflects a simple disagreement about risk. The majority says rates are already high enough to cool the economy and that raising them now could trigger a recession. The minority says the bigger danger is inflation, which has stayed stubbornly above the Fed's target for more than a year.
Outside the building, the debate is just as loud. Oil prices have climbed, partly because of the conflict with Iran, and that pushes up costs across the economy. At the same time, companies are pouring billions into artificial intelligence, a spending wave that some economists say could add to price pressures.
What markets are watching
Bond investors have grown anxious about the Fed's silence on what comes next. Without clear guidance, traders are guessing at every data release. The next inflation report and the monthly jobs numbers will now carry extra weight.
Mortgage rates have already climbed to their highest level in nearly a year, and home buyers are feeling the strain. Pending home sales fell in June, and analysts expect more weakness if rates stay high. Stock indexes closed lower on the day of the announcement, and traders adjusted their bets on when the next move might come. The Fed's next meeting is shaping up to be one of the most closely watched in months, with both camps inside the committee preparing to make their case.