The Federal Reserve opted to keep interestrates unchanged on Wednesday in a split decision that revealed internal division and offered few clues on the timing of potential rate cuts. Two Fed governors—both appointed by former President DonaldTrump—dissented, echoing Trump's long-held view thatcurrent monetary policy is overly restrictive.
Market reaction was muted. The S&P 500rose slightly by 0.2%, while the U.S. 10-Year Treasury yield remained stable around 4.35%, nearly unchanged from its pre-announcement level of 4.328%.
According to futures pricing, markets arenow expecting 44.3 basis points of rate cuts by year-end, a marginal shift from 44.1 bps before the Fed's statement was released.
Commenting on the decision, Brian Jacobsen,Chief Economist at Annex Wealth Management, noted, “Thereis the clear and present danger of slower growth, while the risk of inflation is more speculative and likely a one-off event even if it does happen.”
He added, “The Fedprobably wishes it waited until next Wednesday to have this meeting so they could have the employment numbers. It’s shaping up alot like last year—when they regretted not cutting inJuly and had to play catch-up in September.”
The Fed’s cautioustone underscores growing concerns about economic headwinds, even as inflation remains a policy wildcard.
