Recap: Fed holds at 3.75%-4% in 10-2 vote as Cook dissents for a hike, December move in focus

A hold with two hawkish dissents and no pushback from Warsh on December pricing keeps the bias firmly toward tightening, which supports Treasury yields and the dollar into year end. Cook’s dissent matters for rate expectations because it widens hawkish support beyond the committee’s usual hard-liners, strengthening the case that a December hike has broad backing. The dissent may also be read politically, given Trump’s efforts to remove her, which adds to scrutiny of Fed independence. Fewer scheduled rate decisions from next year mean each meeting carries more weight, and that could amplify market moves around those dates.---Earlier:investingLive Americas FX news wrap 28 Oct: Fed holds rates, yield curve steepens as Big Tech earnings diverge--- The Fed paused, but with two votes for a hike and a chair insisting the job isn’t done, the pause looks more like a breather than a turn.Summary:The Fed held rates at 3.75% to 4% in a 10-2 vote, following last month’s hikeGovernor Lisa Cook unexpectedly dissented in favour of a hike, her first break from the consensus in more than four yearsCleveland Fed President Beth Hammack also dissented for tighter policy, as she did in April and JulyChair Warsh said returning inflation to 2% is paramount and did little to challenge expectations of a December hikeThe Fed will vote on rates at seven meetings next year and six in 2028, devoting the remaining sessions to strategyThe change revises a 45-year-old schedule and fits Warsh’s preference for a quieter Fed The Federal Reserve voted 10-2 on Wednesday to hold its benchmark interest rate at a range of 3.75% to 4%, pausing after last month’s increase, while leaving markets firmly expecting another hike in December, the Wall Street Journal reported.The decision itself was widely anticipated. The surprise lay in the dissents. Fed Governor Lisa Cook voted against the hold in favour of a higher rate, breaking with a record of consistently voting with the committee’s consensus since she joined the central bank more than four years ago. Cook, whom President Donald Trump has been trying to remove from her post for more than a year, had recently expressed concern that inflation remains a problem, but had not indicated she saw an urgent need for a further increase.The second dissent, from Cleveland Fed President Beth Hammack, was more in line with expectations. Hammack has been among the committee’s most hawkish members this year and also dissented in favour of tighter policy in April and July.At his post-meeting press conference, Fed Chair Warsh sought to make clear that pausing did not mean the Fed was easing off its effort to bring inflation down. He said returning inflation fully to the 2% target was the overriding priority, that the Fed had recommitted to that goal since he took over, and that last month’s hike marked the start of action. Warsh acknowledged the Fed had not yet achieved price stability but said it was working toward it, and he offered little to challenge the market view that a December increase is coming.Warsh also announced a change to the Fed’s meeting schedule. Next year, policymakers will vote on rates at only seven of their eight meetings, using the remaining session for a broader strategy discussion. In 2028, that will drop to six rate decisions, with two meetings set aside for strategy. The shift overhauls a calendar that has been in place for 45 years. Warsh first raised the idea internally over the summer.The move fits his preference for a lower-profile Fed. The post-meeting statement has become shorter under his leadership, and he has opted out of the quarterly dot plot of officials’ projections.With two officials already pushing for a hike, the December meeting now looms as the next key test of the Fed’s tightening path.  This article was written by Eamonn Sheridan at investinglive.com.