$币安人生 $牛来 $龙虾 #币安已覆盖60亿美元被盗损失 10No rate hike in October ≠ an end to fighting inflation! The Fed has left the door open to a December rate hike
The Fed held rates steady in October 2026. Don’t misread this as “inflationary pressures have disappeared.” It looks more like a reluctant wait-and-see approach: inflation remains high, but too many real-world constraints leave the Fed with little choice but to hold steady for now.
First, inflation. US CPI rose 3.7% year over year in September, while core CPI rose 2.6%—both still well above the 2% target. Disruptions from the Middle East conflict have pushed up oil prices, while resilient consumption and investment mean inflation remains sticky. In theory, there are grounds for further rate hikes.
But the Fed held steady, largely because real interest rates in the market have already climbed. Long-term US Treasury yields have risen amid fiscal deficits, AI capital spending, and geopolitical risks. Even with the benchmark rate unchanged, borrowing costs across the economy have increased, meaning financial conditions are effectively tightening. So the October pause looks more like an acknowledgment that real rates are already high than a shift toward monetary easing.
Political considerations also matter. With the midterm elections approaching, a rate hike could be criticized as election interference, while a cut could draw accusations of letting inflation run rampant. Holding steady became a compromise, pushing the decision until after the election. Warsh also emphasized that inflation is far from the target and warned against assuming a policy pivot: a rate hike in December remains possible.
The so-called “Warsh plan thrown off course” is also a result of resurgent inflation, soaring Treasury yields, and rising geopolitical risks, which have forced reforms such as pairing balance-sheet reduction with rate cuts to be postponed.
In short: October did not mark the end of the fight against inflation; it left the door open to a December rate hike. Going forward, watch inflation, developments in the Middle East, and fiscal policy after the election. This is macroeconomic analysis only and does not constitute investment advice.
The Fed held rates steady in October 2026. Don’t misread this as “inflationary pressures have disappeared.” It looks more like a reluctant wait-and-see approach: inflation remains high, but too many real-world constraints leave the Fed with little choice but to hold steady for now.
First, inflation. US CPI rose 3.7% year over year in September, while core CPI rose 2.6%—both still well above the 2% target. Disruptions from the Middle East conflict have pushed up oil prices, while resilient consumption and investment mean inflation remains sticky. In theory, there are grounds for further rate hikes.
But the Fed held steady, largely because real interest rates in the market have already climbed. Long-term US Treasury yields have risen amid fiscal deficits, AI capital spending, and geopolitical risks. Even with the benchmark rate unchanged, borrowing costs across the economy have increased, meaning financial conditions are effectively tightening. So the October pause looks more like an acknowledgment that real rates are already high than a shift toward monetary easing.
Political considerations also matter. With the midterm elections approaching, a rate hike could be criticized as election interference, while a cut could draw accusations of letting inflation run rampant. Holding steady became a compromise, pushing the decision until after the election. Warsh also emphasized that inflation is far from the target and warned against assuming a policy pivot: a rate hike in December remains possible.
The so-called “Warsh plan thrown off course” is also a result of resurgent inflation, soaring Treasury yields, and rising geopolitical risks, which have forced reforms such as pairing balance-sheet reduction with rate cuts to be postponed.
In short: October did not mark the end of the fight against inflation; it left the door open to a December rate hike. Going forward, watch inflation, developments in the Middle East, and fiscal policy after the election. This is macroeconomic analysis only and does not constitute investment advice.
