The Fed left the rate in the 3.75-4% range, but the committee split for the first time in six months. Two of the 12 members voted for an immediate 0.25 percentage point hike. Six weeks earlier, the same decision was unanimous.
Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented. A dissenting vote in the Fed statement is a public signal that part of the committee wants a different policy.
For a trader, what matters is not the range itself but the split. It shows that the fork in the road for the December decision is open.
What did the committee decide?
The figure matched expectations. The forecast was 4%, the previous value was 4%. The news is not in the rate but in the dissenters: the September hike, the first in three years, was supported by all 12 members.
- 10 to 2 - the final vote count
- 0.25 percentage points - how much Cook and Hammack wanted the rate raised by
- 3.75-4% - the range in which the rate remained
Why did the committee argue?
The cause of the dispute is inflation. Year over year through September, consumer prices rose 3.7%, almost double the 2% target.
The Fed removed from its statement the phrase that the rate would "help return sooner" to the target. Now the regulator promises to decide "on the basis of the accumulation of new information."
- The wording about the target is gone. The promise of a quick return to 2% has disappeared from the text.
- The assessment of the economy was strengthened. Growth was called "confident"; in September it was "stable."
- There is also an opposing camp within the Fed. Chicago Fed President Austan Goolsbee is publicly in favor of a pause.
What did Warsh say?
Fed Chair Kevin Warsh spoke at a press conference at 21:30 Moscow time. He called inflation too high and stated that "the Fed is ready to act."
- Focus - on price stability
- Third-quarter GDP - most likely above 3%
- For the next decision, more time and data are needed
The main thing: the decision was priced in, and the markets barely moved. BTC rose to $81,185 and returned to $80,950 on Binance. Gold lost 0.1% - roughly $4,036 per ounce.
What happens next?
PCE comes out on Thursday. This is the personal consumption expenditures price index - the inflation measure against which the Fed checks its 2% target.
- The December meeting on December 8-9. Ahead of that meeting, the market via CME FedWatch estimated the probability of a hike at 84%.
- New Fed forecasts. They will also be published in December.
- Other central banks. The Bank of Canada has already raised its rate to 2.5%, and the Bank of Japan will announce its decision on Friday.
It is convenient to keep the dates at hand in the economic calendar, and trading on the news should be checked in advance against the rules in the prop firm catalog.
Were you holding a position at the moment of the Fed decision?
I waited for the figure at 21:00, listened to Warsh, watched BTC give back the entire surge. On a funded account, a second question is added to this. Does the program allow you into the market at the moment of publication, and can you hold a position through the press conference. Somewhere a trade in the data release window is voided along with the challenge result, somewhere the entire point is built on it. Before PCE on Thursday, there is still time to check this.