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United States

Fed holds rates steady at 3.75% to 4% with a split vote

The hold keeps borrowing costs elevated for floating-rate borrowers, and a Dallas Fed official is calling for at least two more hikes.

Photo: ABF Journal

What happened

The Federal Reserve kept its key interest rate unchanged on Wednesday, leaving the target range at 3.75 percent to 4 percent. Big 102.1 KYBG-FM The decision followed a quarter-point increase enacted last month and passed on a split vote, with two policymakers favouring a further quarter-point hike. Big 102.1 KYBG-FM The Federal Open Market Committee said inflation remains elevated and that more information would help it determine the appropriate policy stance. Big 102.1 KYBG-FM Dallas Fed President Lorie Logan voted with the 10-2 majority to hold rates in their current range. The MortgagePoint -

Around it

Logan said the FOMC needs to implement at least two more 25-basis-point rate increases, after which it would make sense to pause and examine developments. The MortgagePoint - Reuters described Logan's remarks as some of the most explicit rate guidance offered by a central banker since Kevin Warsh became Fed Chairman in May. The MortgagePoint - Lenders have seen capital remain available, while the cost of that capital and credit risk are both rising. ABF Journal

What comes next

The central bank said it will assess additional economic data before determining its next monetary step. Big 102.1 KYBG-FM

Sources

  1. ABF JournalMiddle Market Debt Weekly: A Hawkish Fed Puts a December Hike in Play for Floating-Rate Borrowers
  2. Big 102.1 KYBG-FMFederal Reserve Keeps Interest Rates Unchanged Despite Elevated Inflation Concerns
  3. The MortgagePoint -Dallas Fed President: Central Bank Needs More Rate Hikes

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