If you were hoping for relief on borrowing costs, Wednesday wasn't your day. The Federal Reserve kept its benchmark rate at 3.75% to 4%, right where it landed after September's hike. The vote was 10–2, and the two dissenters didn't want a cut. Governor Lisa Cook and Cleveland Fed President Beth Hammack both wanted to raise rates another quarter point.
The statement had a slightly different tone this time. The Fed now says the economy is "expanding at a strong pace", helped by strong productivity and heavy business investment, while inflation "remains elevated. "That's not hard to see. September consumer prices were up 3.7% from a year earlier, and Chair Kevin Warsh pointed out that inflation has been above the Fed's 2% target for close to six years. "It's our responsibility to get inflation down," he said.
Warsh also gave an honest look at the meeting, calling it a "family fight" and a serious, sober discussion. He isn't a fan of forward guidance, so he didn't give any hints about December. Traders are betting anyway. Futures were pricing in about an 85% chance of another hike on December 9, according to Bloomberg data cited by Yahoo Finance.
One bit of housekeeping news, too. Starting in autumn 2027, one of the Fed's eight yearly meetings will focus only on long-term strategy, with no rate vote. Warsh has floated fewer meetings before, but he said eight is still the right number.
Stocks barely moved, ending the day slightly higher, while the 10-year Treasury yield climbed back above 5%. For anyone with a mortgage, a car loan or credit card debt, that's not great news.