Federal Reserve Holds Rates, but Two Members Vote to Raise
The US Federal Reserve held its benchmark rate at 3.75%–4% on Wednesday, a week before the midterm elections. Governor Lisa Cook and the Cleveland Fed’s Beth Hammack dissented in favour of a quarter-point rise. “Inflation remains elevated,” the committee said. The ten-year Treasury yield rose to about 5.03%.
The Fed raised rates in September for the first time in three years, as the Iran war’s oil shock pushed inflation up. Kevin Warsh, the chairman, said that “monetary medicine is starting to work some”, but declined to say what December would bring: “A lot of things can happen.” Futures still put the chance of a December rise at about 86%, according to CME’s FedWatch tool. Today’s PCE inflation and GDP figures will test that pricing. Markets expect the Bank of England to raise rates next month.