The Federal Reserve kept its benchmark interest rate unchanged Wednesday, October 28, in a decision widely anticipated by markets. Chairman Kevin Warsh also outlined changes to the central bank's meeting schedule that will reduce the number of regular opportunities to adjust rates, while describing economic growth as strong.
The Federal Open Market Committee signaled that it was prepared to wait for additional information before deciding on the appropriate course for monetary policy. Its explanation linked that approach to determining how to bring inflation back to its 2 percent target in a timely manner. The decision to leave rates steady was expected, as was opposition from more than one committee member.
Governor Lisa Cook's dissent, however, was unexpected. Fed governors seldom vote against rate decisions, and Cook had not dissented since joining the board in 2022. Cleveland Fed President Beth Hammack also opposed the decision. Both were expected to explain their votes in statements before the end of the week.
Warsh said the committee would continue to hold eight meetings in 2027, but one would focus on strategy and would produce neither an interest rate vote nor a post-meeting statement. Two meetings would follow that format the following year, leaving six scheduled occasions for rate adjustments in 2028. Emergency meetings would remain a separate avenue for action.
Discussing the economy, Warsh identified artificial intelligence as one of several contributors to an expansion he characterized as strong. His remarks placed AI alongside other drivers of growth, rather than attributing the economy's performance solely to the technology.
Changes to the news conference format were also apparent. Wednesday's event lasted about half an hour, similar to September's shortened conference and below the previous norm of roughly 45 minutes. Reporters are now limited to one question. Seating shifted to alphabetical order in September and reverse alphabetical order in October, replacing a largely arbitrary arrangement that had placed larger media organizations near the front.
Phil Camporeale, chief investment strategist at JPMorgan Wealth Management, interpreted the decision as a preference for patience while recent geopolitical developments contribute to uncertainty. Seema Shah, chief global strategist at Principal Asset Management, said the two dissents reinforced her assessment of a tightening bias. She forecast a rate increase in December and another in early 2027.
Thomas Simons, chief U.S. economist at Jefferies, cautioned against assigning a straightforward dovish or hawkish label to Warsh's remarks. He said markets had adapted to the chairman's communication style, but suggested that a fuller understanding of his approach could still take time.
