Fed expected to hold in October as three officials may dissent for a hike
The FOMC is expected to hold rates in October, while three officials may repeat July dissents favoring a hike. The setup leaves Kevin Warsh’s press conference comments on inflation and forward guidance as the next rate-market catalyst.
File photo · The Federal Reserve’s Eccles Building, Washington · Mar 2011 · Federal Reserve · Public domain · Source & licenseThe story
Rabobank expects the Federal Open Market Committee to leave rates unchanged at its October meeting. Hammack, Kashkari and Logan are expected to repeat their July dissents in favor of a hike, preserving an unusually hawkish policy signal even without an immediate rate increase.
Kevin Warsh is expected to repeat the approach he used at Jackson Hole: avoid forward guidance while arguing that inflation data have not shown a meaningful improvement in underlying trends. That would allow the committee to hold rates while keeping the possibility of a future hike open.
The immediate focus is therefore the combination of the decision and Warsh’s press conference. The meeting’s policy outcome is expected to be unchanged, but repeated dissents and hawkish language could shape expectations for the next move.
The next key evidence will be the October decision, the dissent count and Warsh’s comments on inflation. The outlook described by Rabobank also anticipates a later move after the October pause, but the timing remains dependent on how the inflation data develop and how officials frame policy after the meeting.
Our read · Mon, Oct 26
The Fed is expected to hold rates in October as Hammack, Kashkari and Logan may repeat July dissents for a hike.
Why. A hold would avoid an immediate policy shock, but repeated hike dissents and Warsh’s inflation language could keep rate expectations restrictive beyond the meeting. The trade read turns on the dissent count and whether Warsh again withholds forward guidance while questioning improvement in underlying inflation trends.
Both cases
What could change this view: The read fails if the October statement and press conference deliver a clearly dovish interpretation of inflation or if the expected hike dissents do not materialize.
Who reported it · 3
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