Two FOMC members argued for tighter policy now to prevent entrenched inflation and avoid larger future rate increases.
Two Federal Reserve officials dissented at the last FOMC meeting, advocating for a 25 basis point rate hike to address elevated inflation risks. Neel Kashkari and Mary Daly Hammack argued that gradual tightening is preferable to waiting for larger, more disruptive moves later.
The dissenters cited persistent inflation pressures, including recent data center investment as a new demand driver. They also highlighted ongoing supply shocks, suggesting monetary policy must act to prevent inflation from becoming entrenched. Hammack emphasized policy is not yet restrictive enough to control inflation.
Both officials believe a series of small rate hikes would allow flexibility to pause or slow tightening if inflation eases, while avoiding the need for abrupt, larger actions if price pressures persist.