Federal Reserve officials indicated at their July 28-29 meeting that a rate hike would likely be necessary if inflation did not decline. The Federal Open Market Committee voted 9-3 to keep the federal funds rate in a range of 3.5%-3.75%, where it has been all year. Three regional bank presidents dissented, favoring a quarter percentage point increase. The personal consumption expenditures price index, the central bank’s primary forecasting gauge, actually fell 0.1% in June, though the annual rate remained at 3.7%, well above the Fed’s 2% target. Markets now expect the Fed to remain on hold until December, following recent data showing modest monthly price increases.
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