Warsh steps back from signalling as FOMC readies July 29 statement

Kevin Warsh is making a deliberate effort to reduce the signals in the FOMC statement, so small details are likely less consequential. Still, it makes sense to give the statement a final reading before the next one is published. With a 9-3 vote, only two defections would be needed to produce a rate increase. However, if the vote splits 5-4 in either direction, markets could face turbulence.

The statement from July 29 reads as follows:

The Federal Open Market Committee approved the following statement for release by a 9 – 3 vote:

The Committee decided to maintain the target range for the federal funds rate at 3-1/2 to 3-3/4 percent, in support of the Federal Reserve's dual mandate. The Committee is continuing its policy of maintaining ample reserves in the banking system.

Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East. Productivity growth and capital investment are strong. Job gains have kept pace with the workforce, and the unemployment rate has changed little.

Inflation remains elevated relative to the Committee's 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy. The Committee will deliver price stability.

Voting against the monetary policy action were Beth M. Hammack, Neel Kashkari, and Lorie K. Logan, who preferred to raise the target range for the federal funds rate by 1/4 percentage point at this meeting.