Fed holds rates at 3.75%-4%, two policymakers dissent for a hike

The Federal Open Market Committee (FOMC) said inflation “remains elevated” and that it needed more data before deciding on the next move toward its 2% target. The pause follows a quarter-point rate hike in September, after which inflation readings came in above expectations.

Cook’s dissent marked her first break from the committee’s consensus in more than four years. Hammack has dissented in favor of tighter policy at earlier meetings this year as well. Fed Chair Kevin Warsh told reporters that returning inflation to target remained the central bank’s overriding priority, and he did not push back against market expectations for a rate increase in December.

The Fed also upgraded its description of economic growth from “solid” to “strong,” pointing to robust investment and job gains keeping pace with the growing workforce.

Warsh separately announced a change to the FOMC’s meeting calendar: starting next year, policymakers will vote on rates at seven of their eight meetings, with one session set aside for broader strategy discussion. That drops to six rate votes in 2028, revising a schedule that had been in place for 45 years.

Investors continue to price in further tightening starting in December and extending into 2027, given inflation’s persistence above target.

Why it matters: A Fed hold with two hawkish dissents and no resistance to December hike pricing keeps the policy bias tilted toward tightening. That tends to support the US dollar and Treasury yields, while higher-for-longer rate expectations can weigh on risk assets such as the S&P 500 and gold.

Sources: Report.az (business); investingLive; CNBC (economy)