Fed Holds Rates but Two Dissents and Bond Market Bets Signal Over 90% Odds of December Hike

The Federal Reserve held its benchmark rate steady on Wednesday, but two officials dissented in favor of a quarter-point hike, and bond traders now price more than a 90% chance of an increase at the December meeting. Treasuries fell after the decision, with the rate-sensitive two-year yield rising as much as 5 basis points to 4.78%. Govs. Lisa Cook and Cleveland Fed President Beth Hammack dissented, both favoring a 25-basis-point increase, as the FOMC statement described inflation as still elevated, activity expanding at a "strong pace" and domestic spending "resilient." The target range stays at 3.75%-4% after the Fed's first hike in three years in September. Traders are adding to bets on three total increases through mid-2027. "The Fed can't stand still forever," said Quilter Cheviot's Richard Carter, who sees a hike likely around Christmas. Goldman's Kay Haigh expects a December resumption, with further tightening possible next year if energy prices rise again or data stay strong.