“I think it was the only choice they had,” Cohn told Mortgage Professional America. “Economic data has shown us that the economy is still moving along. The GDP number for the second quarter was much higher than expected. Employment numbers have been good, and inflation has been creeping higher. I mean, what else could the Fed do?”
Cohn said the decision to hold is in line with the Fed’s mission to make rate calls based on two primary factors.
“They have that dual mandate, to get the inflation rate down to 2% and maintain maximum employment,” Cohn said. “I think that they are right in their decision, because we still haven’t seen the full impact from all of the tariffs, because many of them are just being established and defined this week, and some aren’t even done yet.
“Until they know what’s going to happen to the rate of inflation from the tariffs, they’re hard-pressed to do anything other than just sit and wait and see what’s going to happen. And the last thing in the world they want to do is cut rates and only to have to raise them again.”
Dissent expected
While the overall FOMC decision to hold was expected, so was the dissent. Two governors, Michelle W. Bowman and Christopher J. Waller, voted no, wanting a 25-basis-point rate cut. Another governor was not in attendance and did not vote. It was the first time since 1993 that there were two dissents to a Fed decision.
