Fed Holds Rates at 3.75%-4% in 10-2 Vote, Signals Possible December Hike

The Federal Reserve held its benchmark interest rate steady on Wednesday within the 3.75%-4% range, citing elevated inflation and the need for further data, while upgrading its economic assessment to "strong" from "solid" and hinting that a rate hike may come as soon as December. The decision was a 10-2 split, with Fed Governor Lisa Cook and Cleveland Fed President Beth Hammack dissenting in favor of a quarter-point hike. The statement marked a shift from the September 15-16 meeting, offering a hint of the forward guidance Chairman Kevin Warsh has said he wants to avoid. Markets reacted modestly: the Nasdaq composite and S&P 500 each rose 0.2%, the dollar index fell 0.2%, and Treasury yields steepened after Warsh's press conference, with the 2-year yield down 3.8 basis points to 4.7% and the 10-year up 5 basis points to 5.042%. The Fed also said it would reduce its policy-meeting schedule starting next year.