FOMC Holds Rates Steady, Records Historic Four Dissents
The Federal Open Market Committee (FOMC) concluded its April 29 meeting, leaving the federal funds rate unchanged at a target range of 3.50% to 3.75%. This was the final meeting chaired by Jerome Powell, whose term is scheduled to end on May 15. Reports indicate Kevin Warsh is expected to succeed him as Fed chair.
Vote and Dissents
The decision to maintain the current rate was not unanimous. The meeting recorded four dissenting votes, a number not seen in 34 years.
- One dissenter, Stephen Miran, voted in favor of a quarter-point reduction in the federal funds rate.
- Three dissenters — Beth Hammack, Neel Kashkari, and Lorie Logan — supported maintaining the current rate but opposed the "easing bias" included in the official FOMC statement.
The dissents suggest that a quarter of the voting members oppose continuing the rate-easing cycle that began in September 2024.
Statement and Outlook
The FOMC statement maintained the current target range. Chair Powell stated the committee is attentive to both its price stability and maximum employment mandates. Market participants have assessed the committee's stance as making further rate cuts in 2026 unlikely.
Market and Economic Context
- The S&P 500's Shiller P/E ratio was near 41 at the start of the year, well above its historical average of 17.4. Historically, ratios above 30 have preceded market declines of 20% or more.
- Premium valuations had previously been supported by factors including artificial intelligence, record share buybacks, and expectations of further rate cuts.
- Analysts have noted that high borrowing costs may delay or cancel costly AI infrastructure projects.