The Federal Reserve (Fed) kept interest rates on hold at 3.75% to 4% on Wednesday. But two of its 12 voters wanted a hike, and they said so on the record.
That split matters for anyone with a mortgage, a stock portfolio, or Bitcoin (BTC). Higher rates make borrowing costlier and can pull money out of riskier bets.
The Fed also rewrote one line on inflation. In September, it said its rate move “will support a timelier return” to its 2% goal. On Wednesday, that promise was gone. Instead, the Fed said “the accumulation of more information” will help it decide what comes next.
Fed Holds Rates, but 2 Officials Wanted a Hike
Fed Governor Lisa Cook and Cleveland Fed President Beth Hammack voted no, according to the Fed’s statement. Both wanted a quarter-point increase.
Six weeks ago, the room agreed. All 12 voters backed a September hike, the Fed’s first in over three years.
Now the vote is 10-2.
Prices explain the tension. Consumer prices rose 3.7% in the year to September, nearly double the Fed’s 2% target. Yet the Fed now says the economy is growing at a “strong” pace, up from “solid” in September.
Before the vote, former Fed Vice Chair Alan Blinder described the bind.
“stuck between the proverbial rock and a hard place”
Traders Were Already Betting on a December Hike
Futures priced an 84% chance of a hike at the Dec. 8-9 meeting before Wednesday’s decision, per CME FedWatch. Minutes from September showed most officials expected one more increase this year.
History adds weight. In July, Hammack and two other regional Fed presidents also voted for a hike. The Fed delivered one at its next meeting.
Not everyone is in a hurry. Chicago Fed President Austan Goolsbee has favored waiting for more data.
“The Fed is moving with caution instead of the conviction we saw in 2022,” KMPG reported.
As BeInCrypto reported on Tuesday, a hold was priced in. Markets barely moved. The Bitcoin price briefly hit $81,185, then settled near $80,950 on Binance, per TradingView. Gold dipped 0.1% to about $4,036 an ounce.
Warsh Speaks Next, Then Inflation Data Lands Thursday
This was the Fed’s last decision before next week’s US midterm elections. Fed Chair Kevin Warsh faces reporters at 2:30 p.m. ET.
On Thursday comes the Personal Consumption Expenditures (PCE) price index, the Fed’s preferred inflation gauge.
Morgan Stanley’s Michael Gapen had already warned that a pause won’t end hikes. The Bank of Canada has raised rates to 2.5%, and the Bank of Japan decides on Friday.
December brings fresh Fed projections. That is where the two dissents meet the data.
