Fed Holds Rates at 3.75%-4% in 10-2 Vote With December Hike Signaled

The Federal Reserve left its benchmark interest rate unchanged at 3.75% to 4% at its October meeting, opting to delay any further tightening until at least December. The decision came just days before US midterm elections and was approved by a 10-2 vote, with Governors Cook and Hammack dissenting in favor of an immediate 25 basis point increase.

Fed Chair Kevin Warsh described the coming period as "information rich" and declined to offer explicit forward guidance, but the Fed's dot plot pointed clearly to a rate hike at the December meeting. Goldman Sachs characterized the stance as consistent with an every-other-meeting pace of tightening. Warsh acknowledged the internal debate was not a quiet one and said he remains unconvinced the Fed has done enough to cool the economy with inflation still elevated.

In a separate announcement, Warsh said the Fed's rate-setting calendar will be reduced from eight meetings to seven in 2027. Markets reacted with modest gains, with the S&P 500 up roughly 0.16%, the Dow up 0.21%, and the Nasdaq 100 up 0.17% following the decision. Gold slipped to around $4,050 in early Asian trading, while Bitcoin briefly rallied before giving back its gains. Investors now turn to upcoming PCE inflation data for further clues on the December decision.