Fed Holds Interest Rates Steady Despite Trump's Demands

President Trump's appointment of Kevin Warsh as head of the Federal Reserve may have changed the face, but not the policy. Despite Trump's demands for lower interest rates to boost economic growth and his fellow Republicans heading into midterm elections in November, the central bank held its benchmark interest rate steady on Wednesday.

This was the second-straight time since Warsh took over in May that the Fed's monetary policy committee failed to cut interest rates as Trump has demanded. Lower rates could provide a short-term economic boost, but would also make borrowing money cheaper and thus push prices higher, exacerbating still-elevated inflation.

However, three members of the Fed's 12-person rate-setting committee dissented in Wednesday's vote, with an unusually large number for a group that strives for consensus. They all wanted a quarter-point increase in the Fed's interest rate, but Warsh and the other nine members voted to hold rates steady.

Warsh reiterated his commitment to getting inflation back down to normal and called the 9-3 vote 'a good family fight' with that goal in mind. Trump appeared to have been ready for the disappointing outcome, calling Warsh 'fantastic' but acknowledging that he has a board of directors that wants to keep rates up.