The Federal Open Market Committee, or FOMC, voted unanimously 12 to 0 to raise the policy interest rate by 0.25% to a range of 3.75-4.00%, according to a disclosure by Prakit Siriwattanaket, Managing Director of Merchant Partners Securities Public Company Limited, via his personal Facebook page. The median of Fed members' interest rate projections, or Dot Plot, for 2026 stands at 4.125%, reflecting the possibility of one more rate hike this year, with 16 of the 18 members favoring at least one more increase and only 2 seeing rates held steady. For 2027, the median Dot Plot remains at 4.125%, but 8 members believe another hike to 4.375% is warranted. The Fed also revised its economic projections, expecting real GDP growth of 2.3% this year and 2.4% next year. Headline PCE inflation is expected at 3.7% this year before easing to 2.3% next year, while the unemployment rate is projected at around 4.1%. At the press conference, Kevin Warsh said the decision stemmed from three main factors: stronger economic and labor market data, inflation trends over the summer that did not improve as expected, and rising uncertainty from geopolitical conflicts. He also affirmed that the Fed will not pre-commit to decisions at upcoming meetings and that this hike was not a case of following financial markets, even though before the meeting markets had priced in as much as a 90% chance of a rate increase.
FOMC raised the policy rate by 0.25% to 3.75-4.00% and signaled possibly one more hike, lifting the effective fed funds rate.
The Fed's rate hike and hawkish dot plot signaling another increase push the 10-year Treasury yield higher (bond prices fall).
