Federal Reserve Holds Fed Funds at a 5.25% to 5.50% Target; Still May Not Be Done

The Federal Reserve Open Markets Committee has concluded its October 31 - November 1 meeting, and it voted unanimously to hold interest rate unchanged at 5.25% to 5.50%.

The Fed's statement indicates that, while this is its second consecutive pause, the Fed is still determining the extent to which additional policy firming may be necessary. While job gains have moderated and tightening financial conditions (through higher long-term Treasury rates) have cooled off the economy, inflationary pressures remain elevated. Powell and his team vow to remain vigilant in their fight against inflation until they are confident that inflation is well on its way to the Fed's long-term 2% target.   

This bias towards additional hikes is basically unchanged from its last meeting.  The bias itself keeps markets on edge and contributes to ensuring that the market's expectations are that the Fed will keep rates higher for much longer.

Yet, if global markets continue to forecast a weakening economy in early 2024, the Fed can leave the door open to make additional Fed funds rate increases for a while, but it may be done for this cycle.