Fed holds rates steady; markets read Warsh as wary of more hikes (opens the source in a new tab)
- The Wall Street Journal reports the Federal Reserve held rates on Wednesday, a month after raising them. Chairman Kevin Warsh said tighter financial conditions showed policy was already working, which investors took as a sign that a fast run of hikes is unlikely; stocks edged up and longer-term yields rose.
- Two officials dissented in favour of a hike, among them Governor Lisa Cook, who had never voted against a Fed decision. Futures still put the chance of a December rise at about 85%.
- The paper notes Anthropic's IPO Initial public offering: when a company first sells its shares on a stock exchange. filing helped tech shares bounce this week, while high oil prices keep inflation worries alive.
- 85%
- futures odds of a December hike
- 2
- officials voted for a hike
Why it matters Markets now hinge on whether the Fed treats AI-driven spending as a reason to keep tightening; a cautious chair buys stocks time but leaves inflation risk with bond investors.
Other side Long-term yields rising while short-term ones fell suggests some investors think the Fed is too relaxed. If inflation stays hot, the calm could turn quickly.
Also read: The Fed's AI Puzzle: Will High Rates Slow the Boom? (The Wall Street Journal)