Fed Holds Rates at 3.75% to 4.0% With Two Dissents Favoring a Hike; Warsh Says the Fed Will Add a Strategy-Only Meeting Next Year

The Federal Reserve left its benchmark rate alone Wednesday, as markets expected, Breitbart reports. This is the follow-up to our earlier preview of the decision.

The decision. The federal funds rate stays in a range of 3.75% to 4.0%, the range set in September. Two officials dissented, preferring a quarter-point increase: Governor Lisa Cook and Cleveland Fed President Beth Hammack.

The statement. The Fed said economic activity is expanding at a "strong pace," up from the "solid pace" it cited in September. It said domestic spending has been resilient, productivity growth is strong, capital investment is robust and job gains have kept pace with the workforce. It also said, "Inflation remains elevated." The Fed also cited uncertainty from geopolitical developments.

The inflation picture. Breitbart reports the Fed's preferred gauge, the PCE price index, was up 3.4% in August, the same as July, after 3.5% in June and 3.8% in May. The September reading is due Thursday. Higher gasoline prices have pushed up inflation this year, but the report says pressure is showing up in a broader range of prices, raising concern that inflation is becoming more entrenched.

What is next. Several Fed officials have signaled a hike at the December meeting. The CME FedWatch tool implies roughly an 88% chance of one. Breitbart notes the upbeat language may give officials room to tighten further. The September move was the first increase in three years, it says, reversing the cuts of late 2024 and 2025.

A process change. Chair Kevin Warsh said that starting next year, one of the Fed's eight meetings will focus on broader economic questions and monetary strategy instead of setting rates. No statement would follow that meeting. He expects strategy meetings to expand to twice a year in 2028.

Note for readers: the figures above are as Breitbart reports them.