Overview
- The Federal Reserve kept its federal funds target at 3.75%–4.00% in a 10–2 vote on Wednesday, with governors Lisa Cook and Beth Hammack voting to raise rates by 25 basis points.
- The Fed’s statement said inflation remains elevated and that officials will gather more information before deciding on policy, a stance that markets interpreted as a conditional pause and pushed the odds of a December hike sharply higher.
- U.S. macro and market moves complicated the outlook: first BEA estimates showed Q3 GDP rose 0.8% quarter-on-quarter, annualized at 3.4%, while corporate news, notably Alphabet’s disappointing quarterly report and a roughly 13% after-hours share plunge, pressured technology stocks.
- Oil prices jumped on fresh Middle East tensions, lifting energy indexes and adding upside risk to inflation expectations, and investors moved money into safer assets even as U.S. equity indexes finished mixed to slightly higher after the Fed decision.
- Emerging-market strain widened in the region: Argentine sovereign risk climbed above 760 basis points, local bonds and currencies weakened, and other Latin American currencies including the Mexican peso and Brazilian real lost ground, raising borrowing costs for households and governments and increasing pressure on central banks to act.