The Zhitong Finance App learned that Kerry Craig, a global market strategist at Morgan Asset Management, said that the Federal Open Market Committee (FOMC) of the Federal Reserve decided to maintain the federal funds rate in the range of 3.75% to 4.00% with 10 votes in favor and 2 against. Craig believes that this decision is a “suspension” rather than a “shift,” and the market still anticipates a high possibility of interest rate hikes in December. At this meeting, Director Lisa Cook (Lisa Cook) and Cleveland Federal Reserve Bank Governor Hammark supported interest rate hikes of 25 basis points, reflecting differences of opinion within the committee. Craig believes this may mean that the question is not whether the Federal Reserve will raise interest rates again, but rather when. However, this decision also shows that the urgency for the Federal Reserve to take action has decreased.
The official statement was short, with only minor adjustments compared to the previous meeting. The assessment of the state of the economy was raised from “solid” (solid) to “strong” (strong), while inflation was described as being “elevated” (elevated); at the same time, the statement reaffirmed the FOMC's clear commitment that “prices will be stable.” Craig notes that this seems to contradict the lesser sense of urgency conveyed by Federal Reserve Chairman Walsh. Walsh believes that monetary policy has begun to work, the financial environment has been tightened, and inflation expectations are not out of control, that is, they have not been unanchored.
Walsh also outlined how the Federal Reserve will meet in the future to discuss monetary policy adjustments. The Federal Reserve will maintain the schedule of 8 meetings per year, but starting in 2027, there will be one meeting every year dedicated to discussing macro-monetary policy strategies. At that time, economic forecasts will not be updated, and interest rates will not be adjusted; the remaining 7 meetings will be substantive decision-making meetings on possible interest rate adjustments. By 2028, the arrangement will be adjusted to 6 substantive decision-making meetings and 2 dedicated strategy discussion sessions.
Craig said it is currently unclear whether these strategy discussion meetings will disclose relevant materials. Since the conference doesn't involve interest rate decisions, it is likely to receive much less attention. This marks that the Fed has entered a new phase of “forward silence” (forward silence). The Fed's communication methods, particularly the “Summary of Economic Forecasts” (Summary of Economic Forecasts) and “dot plots” (dot plots), may change further in the future.