In brief
- The Fed held its target range at 3.75%-4.00% in a 10-2 vote, with Governor Lisa Cook and Cleveland Fed President Beth Hammack dissenting in favor of a quarter-point hike.
- The statement now calls economic activity "strong," up from "solid" in September, and says more information will determine the policy stance.
- Bitcoin edged up about 0.2% to roughly $80,950 after the announcement, and the Fed's next meeting, Dec. 8-9, comes with new economic projections.
The Federal Reserve left interest rates unchanged at 3.75% to 4.00% on Wednesday in a 10-2 vote, with two officials dissenting in favor of another quarter-point hike. Fed Governor Lisa Cook and Cleveland Fed President Beth Hammack voted against the decision, according to the Fed’s statement.
Bitcoin barely moved, edging up about 0.2% to roughly $80,950 in the minutes after the 2 p.m. ET announcement. CME FedWatch, a tool that converts bets on interest rate futures into probabilities, had put the odds of no change at around 90% before the decision.
The decision reaches well beyond Wall Street, because the federal funds rate, which is what banks charge each other for overnight loans, sets the baseline for what consumers pay on credit cards and car loans. The Fed raised that rate in September, its first hike since 2023, in a unanimous 12-0 vote.
“Economic activity is expanding at a strong pace,” the Fed said in its statement, a step up from the solid pace it cited in September. “Job gains have kept pace with the workforce, and the unemployment rate has changed little,” it added.
On inflation, the Fed said it remains elevated and that “the accumulation of more information will help the Committee determine the policy stance appropriate to ensure a timely return of inflation to the Committee’s 2 percent goal."
Hammack also dissented in July, when the committee held rates in a 9-3 vote with Neel Kashkari and Lorie Logan joining her in favoring a hike. Kashkari and Logan sided with the majority this time, so the number of dissents fell to two from three.
→Oil remains a major driver of inflation because the U.S.-Iran war has squeezed global supply, and U.S. crude settled at $99.90 a barrel on Tuesday. Pricier crude lifts gasoline and shipping costs, which eventually show up on grocery shelves, and consumer prices rose 3.7% in the 12 months through September, with gasoline alone jumping 9.1% in the month, the Labor Department reported.
Higher inflation makes investors demand more interest for lending to the government, which lifts Treasury yields, the interest rate on U.S. government debt. The 10-year yield, the benchmark that mortgage rates follow, closed Tuesday at 4.99% after peaking at 5.31% on Oct. 5, so a nearly risk-free return is available without owning anything volatile.
Bitcoin pays no yield, so when Treasuries pay more, money tends to drift out of riskier assets such as crypto and stocks. The price briefly poked above $81,600 earlier Wednesday before slipping back, below a resistance zone between $81,000 and $82,500 that has capped several rally attempts this year.
Leverage, meaning borrowed money used to make bigger bets, tends to exaggerate those moves around Fed events. When prices swing against a trader, the exchange automatically closes the position, a liquidation that adds to the selling pressure. After Fed Chair Kevin Warsh’s Jackson Hole speech in August, about $481 million in crypto positions were liquidated within 24 hours.
Traders had put the odds of another quarter-point hike at the Dec. 8-9 meeting above 70% before the decision. Minutes from September’s meeting show most officials judged another increase would likely be appropriate by year-end.
The October jobs report arrives Nov. 6, October inflation data follows on Nov. 10, and the Fed meets again Dec. 8-9, when it will also publish new economic projections. Fed Chairman Warsh will hold a press conference at 2:30 p.m. to elaborate on the Fed's decision.