The Federal Reserve left its benchmark interest rate unchanged at 3.75% to 4% on Wednesday, but two of its 12 voters dissented in favor of a quarter-point hike, according to the Fed’s statement.
Fed Governor Lisa Cook and Cleveland Fed President Beth Hammack voted against the decision, both preferring a 0.25 percentage point increase. The split keeps pressure on borrowing costs for households, companies, and investors, as higher rates make loans pricier and can pull money away from riskier assets such as stocks and Bitcoin (BTC).
Inflation Remains the Sticking Point
The Fed raised rates by a quarter point in September, its first hike in over three years, with all 12 voters backing that move. This time, the statement dropped a line saying policy action would support a return to 2% inflation. Instead, it said more information would help officials decide the next step.
Consumer prices rose 3.7% from a year earlier in September, according to Yahoo Finance. The vote was also the Fed’s last decision before next week’s US midterm elections.
Traders Were Already Betting on a December Hike
Before the decision, futures markets priced about an 84% chance of a hike at the Dec. 8-9 meeting, per CME FedWatch. September minutes showed most officials expected one more increase by year-end.
Advisory firm KPMG had expected a unanimous hold, with the risk of one dissent. Instead, two officials broke ranks. In July, Hammack and two other regional Fed presidents also dissented in favor of a hike, and the Fed raised rates at its next meeting.
Still, some officials prefer patience. 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,” KPMG said.
Market Reaction and What’s Next
A hold was widely priced in, leaving little room for surprise. Bitcoin briefly touched $81,185 after the release, then eased to near $80,950 on Binance, per TradingView data. Gold slipped 0.1% to about $4,036 an ounce.
Fed Chair Kevin Warsh holds a press conference at 2:30 p.m. ET. On Thursday, the Personal Consumption Expenditures (PCE) price index, the Fed’s preferred inflation gauge, arrives.
Morgan Stanley’s Michael Gapen had said a pause won’t end hikes. Meanwhile, the Bank of Canada has already raised rates to 2.5%, and the Bank of Japan decides on Friday. December’s meeting, which brings fresh Fed projections, now carries the bigger test.
