US Federal Reserve keeps policy interest rate steady in the 3.75-4.00 percent range

The US Federal Reserve (Fed) kept its policy interest rate unchanged in the 3.75-4.00 percent range at its meeting concluding on Wednesday. While the decision was made with 10 votes out of 12 members, 2 members voted in favor of a rate hike.

The US Federal Reserve (Fed) kept the interest rate steady in the 3.75-4 percent range. Following the interest rate decision, major indices on US stock exchanges maintained their horizontal course, while US bond yields and the dollar index recorded a slight increase. Following the first rate hike in three years carried out in September, the Fed's pause in rate increases occurred within market expectations. A potential rate hike in December is still considered to be on the agenda.

The decision published by the Federal Open Market Committee (FOMC) stated that economic activity continues to grow at a strong pace, uncertainty remains high due to geopolitical developments, but domestic spending stays resilient. Pointing out that productivity growth is strong and capital investments are solid, the statement noted that employment growth is in line with the labor force and the unemployment rate showed little change. Emphasizing that high inflation persists, the text conveyed that it was decided to keep the policy interest rate in the 3.75-4 percent range in line with the dual mandate, and confirmed the policy of providing abundant reserves in the banking system and price stability. The statement also noted that gathering more information will help determine the appropriate policy stance to ensure inflation returns to the 2 percent target in a timely manner.

Speaking at the press conference held after the meeting, Fed Chair Kevin Warsh stated that some tightening has been observed in financial and credit conditions following the September rate step, and market participants have acted more selectively in capital allocation. Expressing that the near-term inflation outlook is still very high, Warsh said they have a responsibility to bring inflation down. Warsh announced that the Fed will make changes to its meeting calendar in the coming years, maintaining the number of meetings at 8 per year, but completely dedicating one meeting in 2027 to the general monetary policy strategy, and that no rate voting or policy statement will be made at this meeting. Warsh stated that he expects two strategy sessions to be held in 2028 and that this change will allow time to think about big questions. Responding to a question regarding US President Donald Trump's claims that some board members want the country to go to ruin, Warsh stated that he will not comment on the statements of public officials.