The Federal Reserve, following an FOMC decision, raised the Funds Target Range to 3.75%–4.00% in a move that had been expected. In the subsequent press conference, Chair Kevin Warsh said inflation trends were “not passing the test” and added that he had seen little to alter that view. He also said the summer data did not persuade him that the inflation situation had improved, and that the committee needed confidence that underlying inflation was moving to 2% on a timely basis.
Assessment of Financial Conditions
Warsh said he was “hard-pressed” to describe financial conditions as restrictive, adding that this assessment was widely shared within the FOMC. He described the latest decision as removing a dose of accommodation.
Market Reaction
After the remarks, the US Dollar Index (DXY) moved above 100.00, and market pricing shifted towards two additional Fed rate rises by year-end.
