Consistent with our and the market’s expectations, the Federal Open Market Committee (the FOMC) left the Fed Funds rate unchanged, at 0.25%–0.50%.
Since there was only a statement produced at this meeting, the Fed decided to make the November FOMC meeting a non‐event. It is clear that the FOMC is content with the market’s implied probability (~70%) of a December move. They took an additional step to suggest a December rate hike is likely (supporting market probabilities), but maintained flexibility ahead of the presidential election outcome.
We break the Committee’s statement into three parts:
Only two members of the Committee, Esther George and Loretta Mester, dissented in favor of a rate hike at this meeting. Eric Rosengren dropped his dissent as off‐cycle FOMC meetings are generally not considered appropriate timing for policy action, and changes to the statement reflected a Committee more aligned with his view to raise rates this year.