Fed Holds Rate at 3.75%–4.00% as Two Officials Dissent

Overview

• The Federal Reserve voted 10–2 on Wednesday to keep its policy rate at 3.75%–4.00%, saying US activity is strong, inflation remains elevated, and the committee will wait for more data before changing policy.
• Chair Kevin Warsh told reporters he will set aside specific meetings in 2027 and 2028 for strategic discussions and refused to give forward guidance, signaling the Fed may act again if inflation does not ease.
• Markets swung after the decision with a softer but choppy dollar, modest gains in US tech-led equities, mixed European trading and increased bond-yield volatility.
• Brazil’s surprise re‑election of Luiz Inácio Lula da Silva has driven heavy local selling: foreign and institutional investors withdrew R$6.1 billion in the first post-election session and the Ibovespa plunged nearly 17% for the week, pushing long-term local yields sharply higher.
• A sharp rise in oil to about US$116 per barrel added to market stress by increasing near-term inflation risks that could influence central-bank decisions and raise costs for businesses and households.