The Federal Reserve held its target range at 3.75% to 4% in October, with two officials dissenting in favor of a hike. Chair Kevin Warsh also announced that, starting in 2027, some FOMC meetings will focus on strategy rather than rate decisions.
The Federal Reserve held steady on rates at its October meeting, maintaining its target range of 3.75% to 4%. Two members of the Federal Open Market Committee dissented: Governor Lisa Cook and Cleveland Fed President Beth Hammack favored raising rates by a quarter percentage point.
Fewer rate-setting meetings from 2027
Warsh said the FOMC will keep eight meetings a year, but one meeting in 2027 will focus exclusively on broad monetary policy strategy, with no vote on the federal funds rate and no policy statement anticipated. In 2028, he expects two strategy meetings and six policy-setting meetings.
According to CNBC, Warsh said: "We believe eight meetings per year is the right number for the FOMC". He also said it is not yet obvious what the Fed would share after the strategy meetings.
Warsh sees a strong economy and tighter conditions
Warsh told reporters he does not favor forward guidance outside of a crisis. He said the GDP increase in the first half of the year was revised up from an earlier estimate of 1.8 percent to 2.4 percent, and the third quarter appears to have brought an even more rapid advance.
Warsh also said financial and credit conditions have tightened for some businesses and households since the September decision to raise rates by 25 basis points. However, he said he would not call conditions broadly tight. The September move was the central bank's first hike in three years, and a rate hike is what both dissenters wanted this time.
Investors react to the hold
Fed funds futures had shown a nearly 93% likelihood that rates would hold, according to CME's FedWatch tool. Jeffrey Gundlach of DoubleLine said the Fed should be raising rates. The 2-year Treasury yield was last trading at 4.714%.
Chris Rupkey of FWDBONDS said Cook's dissent could have been a protest vote tied to the Trump administration's legal actions against her.
Source: CNBC
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