The FOMC delivered a 10-2 decision, broadly matching expectations for 2–3 dissenters, with the statement largely unchanged from September apart from a modestly firmer description of activity shifting from “solid” to “strong”. Warsh’s remarks leaned hawkish: he pointed to growth above 3% in Q3, cited strong consumption, and suggested business investment may be rising by a double-digit percentage. He repeatedly referenced tighter financial conditions since September, while offering no explicit guidance on the future rate path.
Policy Outlook and Risk Assessment
The baseline outlook remained for two further 25bp hikes at the December and March meetings, though the balance of risks was described as tilted towards more than two if inflation broadens and underlying inflation accelerates. Process changes were also agreed from autumn 2027: one meeting that season will have no rate decision, and from 2028 two of eight annual meetings will omit a rate decision, with dates unspecified.
Internal Reviews and Market Reactions
On internal reviews, the productivity task force will hold a hearing on 16 November, and the balance sheet task force is due to produce recommendations in early Q1. In markets, the UST curve steepened as front-end rates fell and breakeven inflation rose; December pricing eased to 21bp from 23–24bp, and the next fully priced hike shifted to April from March. EUR/USD rose above 1.1150, while a 6–12M target of 1.10 was maintained.
