Tonight’s FOMC meeting had a lot of content, but it can be summed up in three words: take a breath. ┈➤ October rate hold: the market takes a breath Fed officials voted 10-2 to hold rates steady in October, as expected. However, the FOMC statement emphasized that “domestic spending remains robust, productivity growth is strong, and capital investment is highly active,” noting a stable labor market and that “inflation remains elevated,” while reaffirming the 2% target. Thus, a rate hike in December is still likely—meaning October was merely a temporary breather. ┈➤ Wash is dovish: the market takes another breath Wash proposed a financial instrument—an inflation swap contract—that reflects market expectations for future inflation. He noted that this indicator suggests market expectations for inflation are “moving in a favorable direction.” This aligns with previous analyses by Bee Brother: whether CPI or PCE, both market attention and the Fed’s target refer to annual rates. If oil prices remain within a certain range this year into next—even if that range is relatively high—the year-over-year CPI calculation next year will not be significantly elevated. Wash’s remarks were clearly dovish, giving the market another moment to breathe. Compared to the October hold, this was an unexpected short-term positive. ┈➤ FOMC reform: both the Fed and the market get a chance to breathe At this meeting, Wash advanced a reform. While maintaining eight FOMC meetings per year, one or two meetings annually may involve discussion only, without interest rate voting. This means there could be only seven to eight actual rate decisions per year. Fed officials would gain an additional one to two months of observation time, potentially reducing their workload. For markets, whether in a hiking or cutting cycle, the pace may slightly slow down. According to Wash’s remarks, in September 2027, one FOMC meeting will be discussion-only with no rate vote. For 2028, it remains uncertain, but Wash expects two such voting pauses. ┈➤ Final thoughts Bee Brother believes next September could be the turning point. Since March this year, WTI oil prices have oscillated between $70 and $110, peaking in September. If oil prices remain within this range next year, year-over-year CPI will not rise significantly. There may still be a risk of another hike in Q1 next year, as oil prices hadn’t risen yet in January–February this year. However, April–September next year could serve as an observation period. If oil prices continue without new highs by next September, year-over-year CPI may begin to decline. With no rate decision scheduled for September, the Fed may discuss initiating rate cuts.