Policymakers wrap up two days of meetings in Washington with a decision most observers consider settled in advance. The central bank is expected to hold its benchmark rate steady, though investors see a December increase as likely as officials try to tamp down inflation, NPR reported. Skipping a move this month buys officials time to judge how the economy and markets are absorbing the earlier increase, CNBC has noted. That increase came in September when it lifted the target range by a quarter of a percentage point to a target range of 3.75% to 4.00%. Policymakers have had only a few weeks of data since.
That move marked a turn toward tighter policy. The statement described solid economic activity, resilient spending and strong productivity even as geopolitical uncertainty persisted. Chair Kevin Warsh has also moved the institution away from providing forward guidance, opting instead on a real-time data reliance and leaner communication. Under that approach, officials say less about where rates are headed, putting more weight on each new economic releases, and enabling the flexibility to react appropriately to market surprises.
The data since then have offered little comfort. Consumer prices accelerated in September, driven largely by energy costs, and the core measure also climbed further above target. The surge in energy prices has been linked to the war in Iran, and the decision comes amid preelection political pressure on the central bank, as AP described it.
Attention will fall on Warsh's press conference scheduled for 2:30 PM ET later today. How far the cycle runs remains an open question.