Fed Holds at 4% as Southern California Prices Outrun Wages
Two dissenters wanted another hike, and Los Angeles-area gasoline is up more than 26 percent in a year.
LONG BEACH, California (Surf Revolt) – The Federal Reserve left its benchmark rate at 3.75 to 4.00 percent at its latest meeting, but the vote was no show of unity. Two members of the rate-setting committee wanted to raise it again, and the inflation data that preceded the meeting explains why. For households from the Long Beach waterfront to the Inland Empire, where gasoline and rent set the monthly budget, the central bank’s caution looks a lot like the hour before a set arrives: calm on the surface, with a swell building underneath.
A split committee
The committee voted 10 to 2 to hold, according to a Ground News briefing on the decision. A separate Current Affairs summary of the meeting names the dissenters as Lisa Cook of the Board of Governors and Beth Hammack, president of the Cleveland Fed. Both favored a quarter-point increase to a range of 4.00 to 4.25 percent.
The statement itself was blunt about the problem. Trading Economics quotes the Fed as saying inflation “remains elevated,” while also noting that job gains have kept pace with the workforce and the unemployment rate has changed little. The same report says the hold came after a quarter-point hike in September, so this was a pause in a tightening cycle, not a retreat from one.
How the September hike changed the mood
The September move was unanimous. Admiral Markets’ write-up of the September 16 decision says the vote was 12 to 0, the first hike since July 2023, and a reversal of the December 2025 cut. It credits the decision to inflation well above the 2 percent target, a labor market strong enough to take higher rates (162,000 jobs added in August and unemployment at 4.1 percent), and a Fed projection for 2026 PCE inflation of 3.7 percent, up from 2.7 percent in March. It also points to rising energy prices amid the war with Iran, which it says began on February 28, and names Kevin Warsh as chair since late May.
That list of reasons contains an uncomfortable fact. The shock the central bank is fighting came partly from outside, from energy and war, yet the monetary tool it holds works on demand across the whole economy. Higher rates cannot produce a barrel of oil. They can only make everyone else poorer until the price stops rising. That is a hard bargain, but it is the bargain a central bank with a money-printing franchise offers.
What Southern California is actually paying
The Bureau of Labor Statistics regional release gives the local picture. In its report on prices in the Los Angeles-Long Beach-Anaheim area, covering August, consumer prices rose 3.6 percent over twelve months. Shelter was up 3.8 percent over the year. Energy was up 17.6 percent, and gasoline was up 26.6 percent. Excluding food and energy, the increase was 2.8 percent.
- All items, 12 months: +3.6 percent
- Shelter, 12 months: +3.8 percent
- Energy, 12 months: +17.6 percent
- Gasoline, 12 months: +26.6 percent
- All items less food and energy, 12 months: +2.8 percent
The gap between 3.6 percent and 2.8 percent is the energy bill. A commuter in Riverside County or a gardener driving a truck across the Valley feels it first and hardest, because fuel is a cost of doing the job and cannot be skipped. The coast pays too: every surfer who drives to the beach knows what a gallon costs.
The national picture is no friendlier. A summary of the Bureau of Labor Statistics release posted by an independent CPI tracking site says consumer prices rose 0.6 percent in September and 3.7 percent year over year, up from 3.4 percent in August, with energy up 5.2 percent on the month. That site itself advises readers to verify against the bureau, and we pass along the same caution. The 3.7 percent annual figure matches the Ground News briefing.
The case for holding, and the case against
The majority’s logic is respectable. After a hike, a central bank wants to see how the economy absorbs it, and the statement says more information will help set the stance needed to bring inflation back to 2 percent in a timely way. Cutting off growth with too many hikes has its own victims, including borrowers and small businesses.
The dissenters’ logic is also respectable. If inflation is still elevated and accelerating, waiting means a larger correction later. Savers, retirees on fixed incomes and wage earners whose raises trail prices are already paying the inflation tax in the meantime.
The libertarian view: the problem is the system
Our view is that the fight over a quarter point misses the larger question. A committee of a dozen voters should not be setting the price of money for an entire continental economy. That price is the most important in any economy, and when it is set by judgment rather than discovered by savers and borrowers, errors become inevitable and expensive. This cycle shows how much rides on judgment calls: a cut in December 2025, a hike nine months later, a pause, and now a split vote.
Governments help make that scramble necessary. Deficit-financed spending, including the war spending we examine in a separate report, adds to demand that someone must finance, and the central bank is the lender of last resort. The reporting we reviewed does not tie the war spending to the Fed vote directly, so we offer that as argument, not fact. But it is a reason to demand a government that lives within its means.
For Californians the practical advice is dull but sound: assume rates stay higher for longer, favor flexibility, and lobby Sacramento to stop adding its own taxes and fees on fuel and housing to a bill that Washington has already inflated. Bohiney Magazine covers California and the rest of America from the comedy side, for anyone who needs to laugh at this.
SOURCE: https://bohiney.com/
