FOMC holds rates steady, markets rise modestly
SPY•The Federal Reserve held its benchmark rate in a 3.75%-4% range in a 10-2 vote, citing elevated inflation and upgrading its assessment of economic activity to strong. US stock indexes rose 0.2% after Chair Kevin Warsh began speaking.
1. Rates held steady
The Federal Reserve kept its benchmark interest rate within the 3.75%-4% range on Wednesday, as policymakers awaited more information on inflation. The vote was 10-2, with Governor Lisa Cook and Cleveland Fed President Beth Hammack dissenting in favor of a quarter-percentage-point hike.
2. Economic outlook upgraded
The Fed described economic activity as expanding at a “strong” pace, up from “solid” at its September meeting, and said inflation “remains elevated.” It also said it would reduce its policy-meeting schedule starting next year. The policy statement said more information would help determine the appropriate stance to return inflation to the Fed’s 2% goal.
3. Markets and rate outlook
US stock indexes rose 0.2% after Warsh began speaking. Treasury yields moved in different directions, with the two-year yield down 3.8 basis points to 4.7%, the 10-year yield up 5 basis points to 5.042%, and the 30-year yield up 6 basis points to 5.367%. Several market participants said another hike could come in December.
