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Summary
The FOMC (the interest rate setting committee) decided by a 10-2 vote to keep interest rates in a range between 3.75% and 4.00%. The two dissenters voted for an increase in interest rates.
This decision was widely expected by markets, reflecting both valid economic reasons for a pause and also political considerations given the proximity of US elections (November 3).
Kevin Warsh announced a major structural change to the schedule of future FOMC meetings.
Commentary
The Statement
Below is how the FOMC statement has changed from the previous FOMC meeting:
The interest rate hold was expected by markets and most Federal Reserve watchers. It was reassuring to see two individuals dissent in favor of a rate hike. I believe that in the near future, inflation will persist and a hike will be warranted, especially as September inflation came in very hot at 0.6% (headline Consumer Price Index - CPI).
The press conference by Kevin Warsh, however, was far more noteworthy. Changes are coming to the Federal Reserve, though it remains unclear why - or whether they will be beneficial.
What you’ll find behind the paywall:
How to interpret the dissenting votes and what ‘more information’ may mean;
Whether we should be worried about political influence at the Federal Reserve;
How Kevin Warsh is changing the Federal Reserve and whether it is a good change;
Where I see the inflation going in the near future.
