Why the Fed may hold off on another rate hike despite high inflation
The Federal Reserve left its benchmark interest rate unchanged at about 3.9% on Wednesday, opting for a hawkish rate pause despite stubbornly elevated inflation. Chairman Kevin Warsh indicated that existing policies are already showing signs of having an impact. The central bank stated that holding off on an immediate increase allows for the accumulation of more information to determine future policy steps required to guide inflation back down to the 2% target. The decision follows a rate hike last month, which was the first in three years.
Listen to Live Briefing
Real-time synthesized voice briefing · Live Feeds Desk
- ✓ The Federal Reserve kept its key rate unchanged Wednesday at about 3.9% despite stubbornly high inflation.
- ✓ Chairman Kevin Warsh suggested that Fed policies are already showing signs of having an impact.
- ✓ The Fed raised its benchmark rate last month for the first time in three years, defying President Donald Trump's demands for rate cuts.
What changed
The Federal Reserve kept its key rate unchanged at about 3.9% following a two-day policy meeting.
Live updates
-
Fed Holds Rates at 3.9% Amid High Inflation
The Federal Reserve left its benchmark interest rate unchanged at about 3.9% on Wednesday, opting for a hawkish rate pause despite stubbornly elevated inflation. Chairman Kevin Warsh indicated that existing policies are already showing signs of having an impact. The central bank stated that holding off on an immediate increase allows for the accumulation of more information to determine future policy steps required to guide inflation back down to the 2% target. The decision follows a rate hike last month, which was the first in three years.
Why it matters
The central bank is tasked by Congress to combat inflation by lifting rates to slow borrowing and spendings to reduce price increases. Last month's rate hike defied demands for rate cuts from President Donald Trump. Markets and traders continue to closely watch Federal Reserve messaging and incoming data ahead of the December meeting.
What is confirmed
- The Federal Reserve kept its key rate unchanged Wednesday at about 3.9% despite stubbornly high inflation.
- Chairman Kevin Warsh suggested that Fed policies are already showing signs of having an impact.
- The Fed raised its benchmark rate last month for the first time in three years, defying President Donald Trump's demands for rate cuts.
Still unconfirmed
- Traders are intensely focused on whether Chairman Kevin Warsh will drop any hints on future rate rises for December.
What to watch next
- Incoming economic data on inflation and market reactions
- Messaging from Chairman Kevin Warsh regarding the December policy meeting
confidence 100%Sources used for this update (11)
- Barron's — The Fed’s Dilemma: Can Markets Damp Inflation or Is Another Rate Hike Necessary?
- Financial Times — Will the Fed drop any hints on rate rises?
- Bloomberg.com — Warsh Tells Traders to Watch the Data. They Still Follow the Fed
- USA Today — Why the Fed may hold off on another rate hike despite high inflation
- Reuters — Fed to hit pause on rate hikes, but maybe not for long
- Bloomberg.com — Fed Meeting Focus Turns to Warsh Messaging With December in Mind
- WSJ — Why the Fed Is Expected to Hold Rates Steady Despite a Case for Raising Them
- Yahoo Finance — Fed Set to Lead G7 Trio in Hawkish Rate Pause: Eco Week Ahead
- www.kgns.tv — Federal Reserve keeps interest rates unchanged ahead of midterms despite elevated inflation
- finance.yahoo.com — Why the Fed may hold off on another rate hike despite high ...
- finance.yahoo.com — Federal Reserve keeps rates unchanged despite elevated inflation
Community Sentiment: How do you assess this situation?
Voice your perspective · Real-time aggregated sentiment from the Live Feeds community