Fed Holds Rates Steady Amid Internal Debate

The Federal Reserve held interest rates steady for a fifth consecutive meeting, aligning with market expectations. The decision was made by a vote of 9-3, indicating internal debate within the Federal Open Market Committee (FOMC).

HSBC's Jose Rasco and Michael Zervos believe that core Personal Consumption Expenditures (PCE) Price Index inflation will remain stable, supporting their base case for the federal funds rate to stay at 3.50%-3.75% through both 2026 and 2027.

Fed Chair Kevin Warsh delivered a constructive assessment of the US economy, highlighting resilient growth, a balanced labor market, and accelerating AI-driven investment. He reiterated the Fed's commitment to returning inflation to its 2% target.