Donald Trump

FOMC

President Donald Trump

<p style="text-align: justify">The Federal Reserve decided on Wednesday to keep its benchmark federal funds rate steady in the range of 3.75% to 4%. The move comes as policymakers continue to evaluate persistent inflation pressures and robust economic growth in the United States.</p>
<h2 id="fed-keeps-rates-steady-signals-caution">Fed keeps rates steady, signals caution</h2>
<p style="text-align: justify">The Federal Open Market Committee (FOMC) voted 10-2 in favor of maintaining the current rate, a decision that matched market expectations. Lisa Cook, a Federal Reserve Governor, and Beth Hammack, President of the Federal Reserve Bank of Cleveland, both dissented, preferring a 0.25 percentage point increase.</p>
<p style="text-align: justify">This decision follows a 25 basis point rate increase in September, but the Fed did not provide a clear indication about the likelihood of another hike at its next meeting in December.</p>
<p style="text-align: justify">In the official statement released after the meeting, the Fed reiterated that inflation remains elevated. Officials indicated that they continue to monitor incoming data to determine if additional policy adjustments will be necessary to bring inflation back to the central bank’s 2% target.</p>
<blockquote>
 <p>Policymakers said, “The Committee will deliver price stability,” and signaled that more data would inform their decisions in the coming months.</p>
</blockquote>
<h2 id="inflation-growth-and-economic-indicators">Inflation, growth, and economic indicators</h2>
<p style="text-align: justify">Recent economic data has shown that the pace of price increases accelerated in September, reaching its highest rate in five months. Fed officials pointed to a spike in energy prices, partly connected to the conflict in Iran, as a key driver.</p>
<p style="text-align: justify">The most recent inflation report also revealed that price increases are broadening across additional goods and services, complicating the policy outlook for the central bank.</p>
<p style="text-align: justify">The Fed noted continued strength in domestic spending and resilient economic activity. The unemployment rate remained little changed, while consumer spending and investments in artificial intelligence technology helped sustain growth.</p>
<p style="text-align: justify">Economists predicted that figures to be released Thursday would show the U.S. economy expanded at an annualized rate of about 3.2% in the third quarter.</p>
<p style="text-align: justify">Fresh inflation data, specifically the September personal consumption expenditures (PCE) price index, will soon provide further insight into inflation trends. The Fed considers the PCE index its preferred measure for tracking inflation.</p>
<p style="text-align: justify;background: linear-gradient(135deg,#ffffff 0%,#fffdf9 100%);border:1px solid #f1e4d8;border-left:4px solid #F69434;padding:14px 16px;border-radius:12px;color:#1e293b;font-size:15px;line-height:1.7">Mini dictionary: The PCE (Personal Consumption Expenditures) price index is a monthly measure of the prices that people in the United States pay for goods and services. It is closely monitored by the Federal Reserve as a key indicator of inflation trends and is considered broader than the consumer price index (CPI), as it captures changes in the consumption habits of households.</p>
<h2 id="dissent-market-dynamics-and-future-outlook">Dissent, market dynamics, and future outlook</h2>
<p style="text-align: justify">Cook and Hammack were the only FOMC members to dissent, both favoring a rate hike. This marked Cook’s first dissenting vote since joining the Federal Reserve in 2022. Ongoing disputes between Cook and President Donald Trump continue, as his administration has pursued efforts to remove her over allegations related to mortgage applications, which she denies. A hearing to examine these matters is scheduled for early November, though Cook has stated she will not attend.</p>
<p style="text-align: justify">Other previously hawkish voices, including Dallas Fed President Lorie Logan and Minneapolis Fed President Neel Kashkari, sided with the majority and supported a pause.</p>
<p style="text-align: justify">Tom Graff, Chief Investment Officer at financial advisory firm Facet, argued that the Fed missed an opportunity by not raising rates at this meeting. He said that policymakers risk appearing indecisive and may undermine their credibility in tackling inflation by delaying action.</p>
<blockquote>
 <p>Graff suggested, “There isn’t any material difference between hiking now and hiking in December, especially since a December hike is fully priced in. Hiking today would have bolstered credibility as an inflation fighter. By waiting, there’s a risk of appearing hesitant or complacent.”</p>
</blockquote>
<h2 id="market-expectations-and-interest-rate-trajectory">Market expectations and interest rate trajectory</h2>
<p style="text-align: justify">Market forecasts for the Fed’s October decision shifted significantly in recent weeks. Federal funds futures initially priced in a more than 70% likelihood of a rate hike, but expectations dropped sharply after public remarks from Fed Vice Chair Philip Jefferson and New York Fed President John Williams indicated that policymakers would take time to assess evolving economic conditions.</p>
<p style="text-align: justify">By the day of the decision, traders assigned less than a 10% probability to another rate increase.</p>
<table style="border:1px solid #f1e4d8;padding:8px">
 <thead>
  <tr>
   <th>Month</th>
   <th>Market-implied Probability of Rate Hike</th>
  </tr>
 </thead>
 <tbody>
  <tr>
   <td>September</td>
   <td>&gt;70%</td>
  </tr>
  <tr>
   <td>October (just before decision)</td>
   <td>&lt;10%</td>
  </tr>
 </tbody>
</table>
<p style="text-align: justify">According to Graff, markets are now considering the possibility of one more rate hike in 2026, and perhaps additional increases in 2027. He considers the risks tilted towards further tightening, especially as factors like continued investment in artificial intelligence and elevated oil prices support economic expansion and inflationary pressures.</p>
<p style="text-align: justify">As policymakers avoid offering any forward guidance, investors are left evaluating the probability of further tightening in December and beyond.</p>
<p>The post <a href="https://en.coin-turk.com/fed-holds-policy-rate-at-3-75yuzde-to-4yuzde-inflation-concerns-persist/" rel="noopener noreferrer nofollow">Fed holds policy rate at 3.75% to 4%, inflation concerns persist</a> appeared first on <a href="https://en.coin-turk.com" rel="noopener noreferrer nofollow">COINTURK NEWS</a>.</p>

Fed holds policy rate at 3.75% to 4%, inflation concerns persist

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