The Federal Reserve voted to hold its benchmark interest rate at a range of 3.75% to 4.00% after a two-day meeting in Washington, a decision investors largely expected but one that kept markets on edge because high inflation had raised the possibility of a hike just before the midterm elections.
The Federal Reserve's monetary policy committee, led by Chairman Kevin Warsh, announced it would hold its rate target steady. The decision was not unanimous, with Fed Governor Lisa Cook and Federal Reserve Bank of Cleveland President Beth Hammack dissenting.
Markets had been watching closely because of the off-chance that the central bank could raise rates in light of the high rate of inflation, though most investors anticipated a hold. With the announcement, the Fed leaves borrowing costs unchanged, keeping its target range where it has been while inflation remains elevated.
As widely expected, the Fed kept interest rates unchanged in a 10–2 vote.
De facto avoiding forward guidance, the FOMC's statement noted that "the accumulation of more information will help the Conmittee determine the policy stance appropriate to ensure a timely return of inflation to the Committee's 2 percent target."
Both dissenters favored a rate hike.
Attention now shifts to Chair Warsh's press conference.
#economy#markets#federalreserve#centralbanks
Borrowing costs stay unchanged for households and businesses at a time when inflation is running high.
The decision removes, at least for now, the risk of a rate increase that markets had been bracing for ahead of the midterm elections.
The two dissents reveal disagreement inside the committee over the right course for monetary policy.
Background
The Federal Reserve is the US central bank, and its benchmark interest rate influences borrowing costs across the economy. The committee, chaired by Kevin Warsh, met in Washington over two days before announcing its decision. The vote was not unanimous, marking a divide within the policy group even as the majority chose to hold rates steady.
What to Watch
Whether the high inflation that put markets on edge pushes the Fed to move at a future meeting.
Whether the dissenting votes from Governor Lisa Cook and Cleveland Fed President Beth Hammack signal a growing split in the committee.
How markets react now that the widely expected hold has been confirmed.
9 claims in this story checked against 2 sources: 8 supported.
Show each claim
SupportedThe Fed held its target rate at 3.75% to 4%.Washington Examiner: “announced it would hold its rate target at a range of 3.75% to 4.00%.”
SupportedInflation remained high.Moneywatch - CBSNews.com: “Fed holds interest rates steady even as inflation remains high.”
SupportedTwo members of the policy committee dissented.Washington Examiner: “Notably, the decision was not unanimous, with Fed Governor Lisa Cook and Federal Reserve Bank of Cleveland President Beth Hammack dissenting.”
SupportedThe Fed voted to hold its benchmark rate after a two-day meeting in Washington.Washington Examiner: “After a two-day meeting in Washington, the Fed’s monetary policy committee, led by Chairman Kevin Warsh , announced it would hold its rate target”
SupportedInvestors largely expected the decision to hold rates.Washington Examiner: “a decision that investors mostly anticipated”
SupportedThe decision kept markets on edge because a rate hike was possible in light of high inflation, just before the midterm elections.Washington Examiner: “markets on edge because of the off-chance that the central bank could hike rates just before the midterm elections in light of the high rate of inflation.”
SupportedThe Fed’s monetary policy committee was led by Chairman Kevin Warsh.Washington Examiner: “the Fed’s monetary policy committee, led by Chairman Kevin Warsh , announced it would hold its rate target”
SupportedLisa Cook and Beth Hammack dissented from the decision.Washington Examiner: “with Fed Governor Lisa Cook and Federal Reserve Bank of Cleveland President Beth Hammack dissenting.”
Partly supportedThe Fed’s announcement left borrowing costs unchanged.Moneywatch - CBSNews.com: “While the Fed held interest rates steady on Wednesday, consumers may yet face higher borrowing costs.”
