- The FOMC raised the federal funds rate by 25 basis points, and all 12 voters agreed.
- Stocks sold off after the decision: the Dow Jones Industrial Average tumbled 631 points and the 2-year Treasury yield rose more than 7 basis points.
- The dot plot showed 16 of 18 participants expected at least one more rate hike in 2026, with wide dispersion for 2027 through 2029.
- Warsh gave a terse statement and brief press conference, and he defended Fed independence while declining to discuss President Donald Trump.
Quotes
“This is unlikely to be the end of Fed rate hikes … It's hard to look at roughly 4% unemployment and a core PCE forecast of 3.5% and say the Fed shouldn't be focused on inflation. But monetary policy looks like a really costly way to solve this problem right now.”
“Warsh's press conference was coherent, confident and consistently hawkish without coming across as crazily so. He balanced a stern but disciplined message on inflation with an upbeat take on growth which he said has been strengthening since the start of the summer.”
“Part of the independence of the Federal Reserve is we stay in our lane. Independence is a two-way street.”