When the Federal Reserve announced its first policy decision since Kevin Warsh became chair on June 17, the vote was unanimous, with the committee holding rates at 3.5-3.75%. The minutes from that meeting, released on Wednesday, show that the committee agrees on almost nothing else.
A few participants made the case for raising rates immediately, but went along with the hold. The rest will be split over where the rates should be by December. Many said the current range or slightly below it was appropriate, while others argued it should go higher. The record simply says that future action will depend on how the data looks, and the Fed declined to commit to either direction.
The disagreement traces back to the Fed’s dual mandate of maximum employment and price stability. Some officials see labor conditions as soft enough to stay patient or even cut rates down the line. The other side thinks inflation is still too hot to justify sitting still. Nothing suggests the committee has chosen a side.
The split shows up most clearly in the dot plot released alongside the decision. Nine of the 18 officials who submitted projections now expect at least one rate hike before the end of the year, and six of those nine expect multiple.
Warsh himself gave almost no public indication of where he stands. He has pulled back from the Fed’s longstanding practice of forward guidance and kept his post-meeting statement and press conference shorter than past chairs’. The line that stuck out was that he and his colleagues “will deliver price stability.”
This is not a coincidence. Warsh has pushed for a broader overhaul of how the Fed communicates, including a task force reviewing tools like the dot plot. His reasoning is that if the Fed publicly commits to a path before it knows what it will do, it becomes harder to change course later without disrupting markets. So if the Fed hikes later this year, markets probably will not see it coming.
Warsh has described FOMC meetings as a “family fight,” one he wants to keep respectful but honest, which is exactly what is playing out. Excluding Warsh, who has not formally shared his opinion, officials projecting a hike went from zero in March to nine in June.
Nobody on the committee has hinted at which side will win by December. The dot plot and the recent release are the clearest pictures we will have until the committee meets again.
