The US Federal Reserve left its benchmark rate unchanged at 3.75%–4.00% on Wednesday, October 28, after raising it by 0.25 percentage points in September. The hold was widely expected: CME FedWatch put the probability at about 90% before the meeting.
The vote was 10-2. Governor Lisa Cook and Cleveland Fed President Beth Hammack both wanted another quarter-point hike. In its statement, the Fed upgraded its view of the economy, saying activity is expanding at a “strong pace” where in September it said “solid pace.” Inflation, it said, remains elevated. The text makes no explicit commitment to a December hike, but leaves the door open. Reuters noted that the statement contains forward guidance of the kind Chair Kevin Warsh has said he wants to avoid.
The data explains the cautious tone. The consumer price index rose 0.6% in September and 3.7% over the year, up from 3.4% in August. Gasoline jumped 9.1% in a single month and accounted for more than half of the monthly increase. Core CPI came in at 2.6% over the year. Producer prices rose 6.3% over the year, the sharpest 12-month increase since December 2022.
Goldman Sachs economists expect the Fed to raise rates at every other meeting, which sets a high bar for any change of course before the end of 2026. Markets reacted mixed, according to Reuters: the S&P 500 rose 0.1% and the Nasdaq fell 0.1%, while yields moved higher. The 2-year yield rose to 4.776% and the 10-year to 5.047%.
Attention now turns to Thursday’s PCE inflation report, the Fed’s preferred gauge. It could shift expectations for the December meeting. This is news, not investment advice.
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Sources:
- The Crypto Times: FOMC Meeting Live Today
- Reuters via Yahoo Finance: FOMC holds rates steady, markets mostly follow suit
- Wealth Management: Fed Holds Rates Steady as Two Officials Dissent
- Fox Business: October FOMC
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