Fed holds rates at 3.75% to 4% as Lisa Cook dissents

The Federal Open Market Committee (FOMC) maintained the federal funds rate target at 3.75% to 4%. Fed governor Lisa Cook and Cleveland Fed president Beth Hammack voted against the decision, favoring a quarter-percentage-point increase. Fed officials have indicated that another rate increase may come by year-end. However, officials have signaled no urgency and prefer gradual action with additional data available.

The FOMC statement said additional information would help the committee determine the policy needed to bring inflation back to the 2% goal promptly. The statement described economic growth as proceeding at a "strong" pace, an upgrade from the "solid" description in September.

Cook dissented for the first time as a Fed official. The White House is preparing to hold a hearing soon concerning Cook's possible dismissal over alleged mortgage fraud. Cook's lawyers say the mortgage allegations are an obvious pretext to dismiss Cook. The Supreme Court previously ruled in Cook's favor during an earlier attempt by President Trump to remove Cook from office.

Trump has repeatedly alleged on social media that governors appointed by Biden are politically motivated in obstructing the interest rate cuts Trump wants. For much of recent decades, presidentially appointed governors in Washington generally followed the chair rather than dissenting on monetary policy. However, that practice has weakened since 2024.

CME's FedWatch tool showed an 86% probability this morning of a rate increase at the central bank's final meeting of the year in mid-December. Inflation has stayed persistently above the Fed's 2% target. The Personal Consumption Expenditures Price Index is scheduled for release tomorrow morning. Analysts expect the index to show prices increased 3.6% over the 12 months ended in September. An increasingly outspoken hawkish group on the Fed policy committee, including Hammack, argues that broader and more entrenched inflation pressures justify higher rates.

Chairman Kevin Warsh is scheduled to answer questions from the media at 2:30 p.m. ET.