The US Federal Reserve (Fed) kept its policy interest rate unchanged at the range of 3.75% to 4.00% following its meeting concluded on Wednesday. After the interest rate decision, the main indices in the US stock markets maintained their flat course, while US bond yields and the dollar index recorded a slight increase. The Fed's pause in interest rate hikes, following the first rate increase in three years in September, occurred within market expectations. A possible rate hike in December is still considered to be on the agenda.
The decision published by the Federal Open Market Committee (FOMC) stated that economic activities continued to grow at a strong pace, uncertainty remained high due to geopolitical developments, but domestic spending remained resilient. The statement highlighted strong productivity growth and solid capital investments, noting that employment growth was consistent with the labor force and the unemployment rate showed little change. The text emphasized that high inflation persisted, and in line with the dual mandate, it was decided to keep the policy interest rate in the range of 3.75% to 4, confirming the provision of ample reserves in the banking system and the price stability policy. The statement also noted that gathering more information would help determine the appropriate policy stance to ensure inflation returns to the 2% target in a timely manner. The decision was made with the votes of 10 out of 12 FOMC members, while 2 members voted for a rate increase.
STATEMENTS FROM FED CHAIRMAN WARSH
Speaking at the press conference held after the meeting, Fed Chairman Kevin Warsh stated that some tightening in financial and credit conditions was observed following the rate step in September, and market participants were acting more selectively in capital allocation. Warsh expressed that the near-term inflation outlook was still very high, saying, "It is our responsibility to reduce inflation," and noted that recent discussions have been primarily focused on the price stability target.
Warsh announced that the Fed would make changes to its meeting schedule in the coming years, maintaining the number of meetings at 8 per year, but in 2027, one meeting would be entirely dedicated to the general monetary policy strategy, with no rate voting or policy announcement. Warsh expected two strategy sessions to be held in 2028, stating that this change would allow time to ponder big questions. Responding to a question about US President Donald Trump's allegations that some board members wanted the country to deteriorate, Warsh said he would not comment on public officials' statements.
