Armstrong Economics: 30-07-2026,
The Federal Reserve voted to leave its benchmark interest rate unchanged at 3.50% to 3.75%, marking the fifth consecutive meeting without a change. Yet the 9–3 vote exposed a widening division inside the central bank, as Beth Hammack, Neel Kashkari, and Lorie Logan wanted a 25-basis-point increase.
This is no longer the Federal Reserve debating whether to cut rates. The debate is shifting toward when it will be forced to raise them again. Chairman Kevin Warsh insists that the Fed remains committed to its 2% inflation objective. “There is no soft inflation target,” he told reporters. “There is no soft implicit target, not on this committee’s watch. There’s only a target, and it’s 2%.”
Reducing inflation to 2% does not restore prices to where they were before the inflation began. It simply means that the cost of living continues rising at a slower pace from an already elevated level. Food, insurance, housing, electricity, transportation, and healthcare do not magically become affordable again. The purchasing power that was destroyed is gone.
Warsh acknowledged that reality when he said, “We’ve begun a new chapter and we understand that the five-plus years of inflation above target cannot be cured in nine weeks, or by a single month of modest price decreases.” He added that the Fed “will not waver” in its pursuit of the 2% target. Fine. But the Federal Reserve still refuses to admit that interest rates cannot repair supply shortages,