In brief
U.S. policymakers left the federal funds target at 3.75‑4.00% on Oct. 28, after last month’s 0.25‑point rise. A 10‑2 vote reflected a split committee, while Chair Kevin Warsh said inflation remains "too high" and that more data will guide future moves. The pause signals a possible year‑end rate hike and has lifted the stock market modestly.
The U.S. Federal Reserve on Wednesday, Oct. 28, left its benchmark interest rate in the 3.75‑4.00 percent range, following a 0.25‑point hike last month. In a two‑day policy meeting, the committee decided to keep the federal funds target steady, with a 10‑2 vote. Ten members voted to maintain the rate unchanged, while two favored a 25‑basis‑point increase, according to a statement from the Federal Open Market Committee.
"Economic activity is expanding at a strong pace, but inflation remains elevated," the FOMC said in its policy statement. The statement also reaffirmed the policy of maintaining ample reserves in the banking system and underscored the need for fresh data before any future adjustments.
Fed Chair Kevin Warsh warned that "inflation remains too high" and added that the Fed will watch price changes closely. In a press briefing, Warsh said, "Energy and related prices have moved higher again in recent weeks, and our job is to ensure that relative price changes … do not broaden across the economy."
"Ensuring price stability and watching inflation is not about some fixed date on a calendar or some isolated data point. It’s about ensuring we have clear objectives and about monetary policy strategy,"
Warsh noted that the accumulation of more information would help the Committee determine a policy stance that ensures inflation returns to the 2 percent goal. He also announced a change to the FOMC meeting schedule for next year, stating that seven of the eight meetings will feature rate‑setting votes.
The meeting’s split decision revealed divisions, with Cleveland Fed President Beth Hammack and Fed Governor Lisa Cook dissenting in favor of an immediate 25‑basis‑point hike. The Fed’s decision left the interest‑rate gap between the U.S. and South Korea up to one percentage point, according to Yonhap.
Investors reacted by giving the markets a modest lift. The Dow Jones Industrial Average rose 97.53 points (0.19%), the S&P 500 gained 21.38 points (0.28%), and the Nasdaq Composite added 72.04 points (0.27%). Eight of the 11 primary S&P 500 sectors closed in positive territory, led by technology and energy, while utilities and real estate posted declines. Financial analysts see the pause as setting the stage for a potential year‑end rate increase.
