The Federal Reserve held its benchmark interest rate steady at 4.00% as expected, although the Federal Open Market Committee was not unanimous in its decision, with two members voting for a further increase. The pause follows September’s quarter-point hike, the Fed’s first rate increase since 2023. Some key takeaways from today’s meeting:
The FOMC voted 10-2 to keep its benchmark overnight borrowing rate in a range of 3.75%-4.00%. Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented, preferring another quarter-point increase.
The Fed’s policy statement now says gathering more information will help it decide the right policy stance to return inflation to 2%, signalling the Committee wants to see more data before deciding its next move.
Speaking at his press conference, Chairman Warsh said the Committee’s discussion focused mainly on price stability, describing today’s decision as a pause to take stock of the economy as part of the gradual process of bringing inflation down.
Warsh noted that Americans are still dealing with inflation that has been “running above the Committee’s objective for close to six years,” and said energy prices have moved higher again in recent weeks.
Annual CPI inflation rose to 3.7% in September from 3.4% in August, driven largely by higher energy prices. Early estimates suggest the Fed’s preferred measure (PCE) remains at 3% or higher, with official data due tomorrow.
The Fed described the U.S. economy as expanding at a strong pace, and Warsh characterized labour market conditions as very positive, with unemployment insurance claims at their lowest level in generations.
Warsh and the FOMC remain committed to returning inflation to 2% and will continue to monitor economic data to inform their decisions.
The next FOMC rate decision will be December 9th.