Key Takeaways
- • The Federal Reserve held its benchmark interest rate unchanged in the 3.75%-4.00% range at its latest meeting, as widely expected, following a 0.25 percentage point hike last month, the first increase in three years.
- • Fed Chair Kevin Warsh said inflation remains well above the Fed's 2% target, with oil prices surging amid the Middle East conflict, and said the Fed exceeded its inflation target for nearly six years.
- • Two of twelve voting members dissented, both favoring a 0.25 percentage point hike, signaling internal pressure toward tightening.
- • Market participants expect a possible rate increase at the final meeting of the year in December.
- • Warsh announced that rate-setting meetings will be held less frequently starting next year and said next week's midterm elections did not influence the decision.
Summary
The U.S. Federal Reserve kept its benchmark interest rate unchanged at 3.75% to 4.00% at its most recent policy meeting, according to SBS News, a decision that was widely expected by markets. The hold follows a 0.25 percentage point increase last month, the first rate hike in three years. The Fed said that although inflation remains elevated, it will determine its future policy direction after gathering additional information.
Fed Chair Kevin Warsh said inflation has been above the central bank's 2% target for nearly six years and that bringing it under control is the Fed's responsibility. Oil prices have surged following the Middle East conflict, which has pushed inflation significantly above target. Warsh also stated that next week's midterm elections did not influence the outcome of the meeting, and he announced that rate-setting meetings will be held less frequently beginning next year.
Two of the twelve participating members voted against the hold, arguing for a 0.25 percentage point increase. Because the Fed had hinted at the possibility of an additional hike within the year when it raised rates last month, some market participants expect a rate increase when the Fed convenes for its final meeting of the year in December.
Major New York stock indices closed slightly higher with no significant volatility, as the rate freeze had been largely priced in. Eric Lynch, senior executive at Suncoast Equity Management, said Fed officials likely wanted to avoid influencing the midterm elections.
Fed Chair Kevin Warsh said inflation has been above the central bank's 2% target for nearly six years and that bringing it under control is the Fed's responsibility. Oil prices have surged following the Middle East conflict, which has pushed inflation significantly above target. Warsh also stated that next week's midterm elections did not influence the outcome of the meeting, and he announced that rate-setting meetings will be held less frequently beginning next year.
Two of the twelve participating members voted against the hold, arguing for a 0.25 percentage point increase. Because the Fed had hinted at the possibility of an additional hike within the year when it raised rates last month, some market participants expect a rate increase when the Fed convenes for its final meeting of the year in December.
Major New York stock indices closed slightly higher with no significant volatility, as the rate freeze had been largely priced in. Eric Lynch, senior executive at Suncoast Equity Management, said Fed officials likely wanted to avoid influencing the midterm elections.
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