The Federal Open Market Committee held the target range for the federal funds rate at 3.75 to 4.00 percent on Wednesday, in a 10 to 2 vote. Lisa Cook and Beth Hammack voted against the action, preferring to raise the range by a quarter point at this meeting. The statement said economic activity is expanding at a strong pace, job gains have kept pace with the workforce, and inflation remains elevated, and it repeated that the Committee will deliver price stability.
The split is the story. One meeting after the committee moved unanimously, two voters wanted another increase now, which makes this a hawkish hold rather than a pause. Chair Kevin Warsh told the press conference that energy and related prices have moved higher again in recent weeks and that the committee’s job is to ensure relative price changes in some sectors do not broaden out across the economy. He said the accumulation of more information would help the committee determine the stance needed to return inflation to the 2 percent goal in a timely manner.
Warsh also pointed to growth. He said first half growth estimates had been revised up, and reporting of the press conference put third quarter growth at over 3 percent, led by high technology with other categories contributing. That combination, firm growth with inflation above target for nearly six years on his telling, is why the dissenters’ argument that price pressure has spread beyond the energy shock, including through AI infrastructure spending on chips and components, found a hearing inside the room.
The market read it as tightening risk deferred, not removed. Treasury yields rose on Thursday morning, with the 10 year up 5.2 basis points to 5.05 percent at the most recent close in this site’s market tables. The next test arrives within hours: this morning’s personal consumption expenditures price data, which Warsh cited as part of the information the committee is waiting for, will set the terms for December pricing.