Fed officials were divided on a future path for interest rates

Kevin Warsh wanted a fight. Well, at the very least, he wanted a gentle disagreement, perhaps of the “Dad technically won the Scrabble game, not little brother Billy” variety.

Previously, the Federal Reserve chair had expressed hope for “a good family fight” when it comes to rate policy, saying in a June 17 press conference that the result of that “fight” should ultimately “make the discussion we have internally better, stronger, more of a dialectic, so that we can finally deliver on that price stability objective.”

It wasn’t his first time using the phrase: Warsh also used the same “family fight” analogy at his Senate confirmation hearing, per CNBC.

So, did that desired family fight end in an overturned Scrabble board and tears, or reconciliatory hugs? It’s a bit hard to say. (Also, not exactly the vibe of the Federal Open Market Committee.)

In any case, the minutes of the June 16–17 FOMC meeting released on July 8 showed there was some gentle disagreement: Fed officials were split on where the fed funds rate would be by year’s end.

Though the committee unanimously agreed to keep interest rates steady in the range of 3.5% to 3.75%, which was the first vote since June 2025 that lacked opposition, there was less unanimity when it came to their outlooks.

“Many participants indicated that the appropriate level of the federal funds rate would be within or slightly below the current target range at the end of this year. Many other participants, however, assessed that the appropriate level of the federal funds rate would be above the current target range at the end of this year. Participants noted that their future policy actions would depend on incoming information,” according to the released minutes.

Limited guidance. However, in the months ahead we’re less likely to get lots of comments on monetary policy coming from FOMC members, and Warsh in particular, who has said the goal of Fed communication is “more thinking, less talking.”

After last month’s FOMC meeting, Warsh acknowledged the Fed’s monetary policy statement was “a bit shorter, a bit simpler and it dispenses with some older language,” adding that “absent, also, is so-called forward guidance, which we agreed was not well suited to the current policy conjuncture.”

The minutes also revealed that “a number of participants noted that it was an opportune time to consider significant changes to the FOMC’s postmeeting statement”; a majority said “they saw advantages in shortening the statement.”

Beyond the meeting minutes, another Fed official offered glimpses into his own thinking on the issue.

In July 6 remarks at a conference sponsored by the Bank of Italy, FOMC member and Fed Governor Christopher J. Waller said he continued “to believe that forward guidance can be a valuable tool that has, at times, significantly strengthened policymaking and will continue to be useful. But forward guidance is more art than science, and there have been times when it has hindered, rather than helped, policymaking.”

“Forward guidance is also problematic when there are potentially different economic scenarios confronting policymakers, each with a significant probability of occurring and requiring different policy paths,” he continued. “One cannot simply take a weighted average of these scenarios as the ‘base case’ and use it to give forward guidance.”