BlockBeats report, on October 27, according to The New York Times, the market widely expects the Federal Reserve to hold interest rates steady at this week’s FOMC meeting (October 27–28). Federal Reserve Chairman Kevin Warsh faces a communication challenge: he must explain why the Fed is choosing not to raise rates despite persistent inflationary pressures, while also demonstrating that its commitment to fighting inflation remains firm and preserving the possibility of further rate hikes this year.
Reports indicated that the Federal Reserve raised rates once in September, after which markets initially priced in another hike in October; however, statements from officials including New York Fed President Williams, Vice Chair Jefferson, and Governor Waller in late September to early October suggesting “we can wait a bit longer” caused the probability of an October rate hike to drop from over 70% to under 30%. Meanwhile, elevated oil prices and material and electricity demand driven by AI infrastructure increased price pressures in September. The Nasdaq 100 Index has declined more than 7% since its historical peak on October 6, and the 10-year U.S. Treasury yield previously rose above 5% for several consecutive weeks. Stephen Stanley, Chief Economist for Santander U.S. Capital Markets, expects no rate change this week but believes another hike is still possible in December; he noted that Powell needs to explain “why no action was taken in October and why a December hike remains under consideration.”
Since taking office in May, Wash has provided less forward guidance on the interest rate path. The press conference following the July hold, due to its overly brief wording, triggered market volatility; subsequent hawkish remarks in August and the September rate hike, along with the dot plot signal of “one more hike this year,” temporarily improved communication. With this week’s decision approaching the November 3 U.S. midterm elections, and given Trump’s prior criticism of the September hike, analysts believe Wash must avoid having the hold interpreted as politically motivated.