The Fed Held Rates. The Tone Didn't Soften.
The Fed kept rates at 3.75% to 4.00% on Wednesday. Inflation was 3.7% in September, and traders had priced almost no chance of a hike today.
Three things changed in the statement:
- Growth went from "solid" to "strong."
- The line saying September's hike would help bring inflation back to 2% faster was dropped.
- In its place, the Fed says more information will help decide the next step.
The vote was 10–2. Both dissenters wanted another hike. One was Governor Lisa Cook, her first dissent. The other was Beth Hammack, who also wanted a hike in July.
Over the last three meetings: three officials wanted a hike in July, all twelve voted for one in September, and now two want another.
Fed chair Kevin Warsh also announced a schedule change. From 2027, one meeting a year will be about strategy only, with no rate vote and no statement. Two in 2028. That means seven rate votes in 2027 and six in 2028.
In July he told markets to "play the ball, not the referee," so this looks like the same idea. That's my reading, not something he said.
Gold futures slipped about 0.7% after the decision. Bitcoin gave back most of its early gains near $80,000.
For balance, core inflation is 2.6%, and Jefferson and Williams say there's time to wait for data. Still, traders see about an 84% chance of a hike on December 9.
First check: PCE inflation and GDP on Thursday. Analysts expect PCE near 3.6%.
My read: the Fed held, but it's leaving the door open for December.
$BLUR $SNXXB
The Fed kept rates at 3.75% to 4.00% on Wednesday. Inflation was 3.7% in September, and traders had priced almost no chance of a hike today.
Three things changed in the statement:
- Growth went from "solid" to "strong."
- The line saying September's hike would help bring inflation back to 2% faster was dropped.
- In its place, the Fed says more information will help decide the next step.
The vote was 10–2. Both dissenters wanted another hike. One was Governor Lisa Cook, her first dissent. The other was Beth Hammack, who also wanted a hike in July.
Over the last three meetings: three officials wanted a hike in July, all twelve voted for one in September, and now two want another.
Fed chair Kevin Warsh also announced a schedule change. From 2027, one meeting a year will be about strategy only, with no rate vote and no statement. Two in 2028. That means seven rate votes in 2027 and six in 2028.
In July he told markets to "play the ball, not the referee," so this looks like the same idea. That's my reading, not something he said.
Gold futures slipped about 0.7% after the decision. Bitcoin gave back most of its early gains near $80,000.
For balance, core inflation is 2.6%, and Jefferson and Williams say there's time to wait for data. Still, traders see about an 84% chance of a hike on December 9.
First check: PCE inflation and GDP on Thursday. Analysts expect PCE near 3.6%.
My read: the Fed held, but it's leaving the door open for December.
$BLUR $SNXXB
