Fed Meeting Interest Rates: Hold at 3.75%-4%, Two Dissent
The Federal Reserve left its benchmark rate at 3.75% to 4% on Wednesday, with Governor Lisa Cook and Cleveland Fed President Beth Hammack dissenting in favor…
The Federal Reserve kept its benchmark rate unchanged on Wednesday, holding the overnight funds rate in a range of 3.75% to 4%, even as inflation readings point higher. The fed meeting interest rates decision came with two dissents, both from officials who wanted a hike.
The Federal Open Market Committee has held the rate there since it approved a quarter percentage point increase in September. That was the first rise in more than three years, according to Yahoo Finance. Markets had priced in a less than 10% chance of a hike this time, CNBC reported, so the outcome surprised few.
Two votes for a hike
Two of the 12 FOMC voters dissented. Governor Lisa Cook and Cleveland Fed President Beth Hammack both wanted a quarter-point increase.
For Cook, it was the first dissent since she joined the Fed in 2022 as an appointee of President Joe Biden. Hammack also dissented in July. Dallas Fed President Lorie Logan and Minneapolis Fed President Neel Kashkari voted no then too, and have both said higher rates are needed. This time they sided with the majority.
Cook sits at the center of a separate fight. President Donald Trump has tried to remove her over allegations about information she gave on home loan applications. The Supreme Court stopped those attempts, but the administration has restarted the effort, with a hearing set for early November.
What the statement said
"Inflation remains elevated," the post-meeting statement said. It added that "the accumulation of more information will help the Committee determine the policy stance appropriate to ensure a timely return of inflation to the Committee's 2 percent goal."
The statement described economic activity as "expanding at a strong pace," up from "solid" in September. Apart from dropping a sentence that explained the September increase, little else changed.
Officials also said uncertainty remains elevated, partly because of geopolitical developments. They noted that domestic spending has been resilient and that productivity and capital investment are strong.
Inflation keeps climbing
The data explain the split. The Consumer Price Index rose 3.7% last month, up from 3.4% in August. Core CPI, which strips out food and energy, rose 2.6% against 2.4% in August. Wholesale prices jumped more than 6%. The core Personal Consumption Expenditures price index, the Fed's preferred gauge, is due Thursday and is projected to top 3%, Yahoo Finance reported.
Inflation has stayed above the Fed's 2% target for more than five years, and the pace has picked up since September, CNBC said. Fed Vice Chair Philip Jefferson and New York Fed President John Williams have both said current conditions give policymakers time to weigh their next move. Hammack said weeks ago she favors more frequent, smaller adjustments so an inflationary mindset does not take hold.
Fed Chairman Kevin Warsh admitted the job is not done. "You haven't achieved price stability, you're right about that," he told reporters, adding: "But we're working on it."
Election backdrop and schedule change
The decision landed days before the Nov. 3 midterm elections, with control of Congress at stake. Some observers have speculated that officials would not want to raise rates this close to a vote. Trump, who nominated Warsh, has long argued the funds rate should be much lower and has said the Fed's policy hurts the economy more than inflation does. "Politics played no role in the decision," Warsh said.
Warsh also announced a change to the meeting calendar. The committee will still meet eight times a year, but starting in 2027 one meeting will focus "exclusively on broad monetary policy strategy, with neither a vote on the federal funds rate nor a policy statement anticipated." In 2028, two meetings will be strategy sessions and six will set policy.
The committee meets again on Dec. 9. The CME FedWatch tool shows traders pricing in 86% odds of a quarter-point hike at year-end.
Source: cnbc.com
