Fed holds rate at 3.75%-4.00% in 10-2 vote; two members wanted a hike
The US central bank paused at its October 28 meeting, but two officials voted to raise rates, and the rupee slipped to about 95.30 per dollar.
The 30-second read
- The Fed kept its rate at 3.75%-4.00% after the October 28 meeting, with a 10-2 vote.
- Governor Lisa Cook and Cleveland Fed President Beth Hammack wanted a 25 bp hike.
- Higher-for-longer US rates raise the risk of foreign fund outflows from India; the rupee fell 8-14 paise.
IllustrationThe US Federal Reserve left its benchmark rate at 3.75%-4.00% after its October 28 policy meeting, as reported by Business Today and The Hindu. The vote was 10-2. Markets had largely anticipated the outcome, as inflation remained sticky and the Fed waited for more data.
The two dissenters wanted to tighten. Governor Lisa Cook and Cleveland Fed President Beth Hammack voted for a 25 bp hike, first reported by The Hindu. Kevin Warsh, the Federal Reserve Chairman, said inflation is above the 2% target and that keeping prices stable is the top priority, first reported by Business Today. Business Today also first reported that the Fed upgraded its view of economic activity from solid to strong, and that Warsh said Q3 GDP growth likely exceeded 3%.
On guidance, The Hindu first reported that Warsh ruled out relying on forward guidance except under "exigent circumstances" or in "a crisis". He also said that from 2027 one meeting will be devoted to strategy, and in 2028 there will be two strategy meetings and six for policy. Business Today first reported that he denied politics influenced the decision ahead of the US midterms. The Hindu added that markets price a quarter-point hike for December.
In India, The Hindu first reported the rupee at 95.30-95.36 per dollar, down 8-14 paise. The same outlet reported the Sensex up 852.58 points at 74,098.61 at 2.30 p.m.
Why it matters
Higher-for-longer US rates make the dollar and US Treasuries more attractive, which raises the risk of foreign fund outflows from India. The rupee is already weaker, and the West Asia crisis adds to volatility in emerging markets.
The data
| Item | Reading |
|---|---|
| Fed rate | 3.75%-4.00% |
| Vote | 10-2 |
| Dissent | 25 bp hike favoured by two |
| Rupee | 95.30-95.36 per dollar, down 8-14 paise |
| Sensex (2.30 p.m.) | 74,098.61, up 852.58 points |
