The second-to-last Federal Open Market Committee meeting in 2026 has come and gone, with some new information unveiled at Chair Kevin Warsh’s press conference.
The FOMC decided in its meeting to hold interest rates steady on Wednesday, although two members dissented.
That comes as the inflation rate has been above the Fed’s 2% target, while unemployment remains low. Warsh also announced a shake-up to next year’s FOMC meeting plans.
Here are three large takeaways from Wednesday’s Fed meeting.
Two dissents
While last month’s 25-basis-point hike was a unanimous 12-0 decision, the October vote to hold rates steady was 10-2. Lisa Cook and Beth Hammack wanted to hike rates by 25 basis points again.
“The skew is toward tightening, and today’s decision reads as a disagreement over timing rather than over destination,” Jason Pride, chief of investment strategy and research at Glenmede, said in commentary.
Inflation remains a problem
Warsh detailed some positives about the employment side of the dual mandate, including low four-week moving average unemployment claims, a lower jobless rate than a year prior, and better job growth than last year.
Meanwhile, the other side of the dual mandate, price stability, is more of a concern. Inflation has remained above the Fed’s 2% target. The Fed hiked rates in September to try to help that. Warsh said at Wednesday’s press conference that the FOMC’s discussion has been largely focused on price stability.
“Energy and related prices have moved higher again in recent weeks,” he said. “And our job is to ensure that relative price changes in some sectors do not broaden out across the economy and that inflation expectations remain as they are anchored.”
Warsh said quashing inflation isn’t about a fixed date on a calendar nor an isolated data point.
“If it were about those two things, this job would be easier, and we wouldn’t be suffering from nearly six years of inflation above target,” he said.
Meeting switchup
Next fall will look different. Warsh announced at the FOMC press conference that there will still be eight meetings next year, as usual, but one of them will “focus exclusively on broad monetary policy strategy with neither a vote on the federal funds rate nor a policy statement anticipated.” He expects that in 2028, two of those meetings will be like this.
“A change to the Fed’s meeting schedule is significant. That is a dollar killer,” Juan Perez, senior director of trading at Monex USA, said in commentary. “Less information is a big problem for forward guidance. It also seems like an admission from the Fed that the economy is not firing on all cylinders.”
Warsh said the change was discussed over a couple of meetings, and the reason behind making it is because it’s important to have time and space to make “strategic deliberations,” looking over longer time horizons, and thinking through large questions.
“It’s yet another change to get the conduct of monetary policy on the right track,” he said.
The committee is scheduled to meet once more before the year ends in December, which means they will have a slew of economic data to help make their last decision. Traders expect a rate hike to be the likely outcome of that last meeting.
