NEAM Insights

October Overview As expected, the Fed decided to maintain the target range for the federal funds rate at 3.75% to 4% at its October 28 meeting. There were two dissents in favor of a quarter-point hike. The statement upgraded the assessment of economic activity from “solid” to “strong” and noted that the “accumulation of more information” will help determine the appropriate policy stance to return inflation to the 2% goal. The statement and subsequent press conference suggest that the Fed will consider market and financial conditions, alongside economic data and the effects of higher rates on the economy, when determining the future policy rate. Perhaps the biggest surprise from the press conference was Warsh’s announcement that, beginning in 2027, one of the eight FOMC meetings will focus on strategic policy discussion rather than a policy vote. The number of such meetings will increase to two in 2028. This change could increase volatility around meetings at which a policy rate change is possible. Taken together, signals from the Fed and fed funds futures pricing point to a 25-basis-point rate hike in December. Read More

September Overview At its most recent meeting, the Federal Open Market Committee unanimously voted to raise its benchmark rate range by 25 basis points to 3.75%-4.00%. This was the Fed’s first rate increase since July 2023. In his post-meeting press conference, Chairman Warsh described the economy as “strengthening” and the labor market as being in “good shape.” However, he emphasized that the “plain fact is inflation is too high and has been for too long.” At its July meeting, the committee had chosen to wait for more guidance from incoming data before deciding whether to act in September. Read More

August Overview The July Fed minutes revealed an emerging, though not yet dominant, hawkish tilt. Three voting members ultimately supported a 25-basis-point increase in the federal funds rate. Although “most participants supported maintaining the current target range,” the minutes also noted that “several participants favored an increase,” indicating broader support for tightening than the three recorded votes alone suggested. Read More

July Overview With a 9–3 vote, the Fed held its benchmark rate steady at the July meeting. In a brief statement designed to avoid signaling its rate outlook, the Fed again highlighted the economy’s “solid” growth and elevated inflation. However, unlike the previous meeting’s unanimous decision, the July vote revealed clearer dissent: three members favored raising the federal funds rate by 25 basis points. Read More

June Overview June marked the first FOMC meeting under Fed Chairman Kevin Warsh, with the committee maintaining the funds-rate target at 3.50%–3.75% in a unanimous vote. The shorter statement removed explicit forward guidance while still describing an expanding economy facing uncertainty and inflation that remains above target. The updated Summary of Economic Projections leaned more cautious: 2026 growth was trimmed, near-term inflation assumptions rose, unemployment was little changed, and the median policy-rate path shifted higher. The message is that the Fed still views activity as durable, but it is less willing to assume disinflation will resume quickly; the hurdle for easing has risen. Read More

May Overview Fed minutes from the last FOMC meeting highlighted a shifting policy tendency of the committee, from one with an “easing bias” to a more balanced two-way outlook for future interest rate decisions to account for persistently elevated inflation. While participants generally saw a potentially longer holding pattern until more certainty emerged on the economic implications from the Middle East conflict, the minutes shared that “many participants” would have favored a statement that removed an easing bias regarding future policy decisions. Read More

April Overview Minutes from the Fed’s March meeting provided insight into potential outcomes at the April meeting. At the time of the March meeting, the committee felt that risks to both the inflation and employment sides of its mandate were “elevated,” with conflict in the Middle East magnifying these challenges. Read More

March Overview The Fed held steady at its most recent meeting, keeping its policy rate range at current levels. With the labor market stable but moderating, inflation still above target and geopolitical uncertainty rising, Chair Powell emphasized that future policy decisions would remain data-dependent. The Fed also commented that the economy appears on track, supported by “resilient” consumer spending and increasing business investment. Their median economic estimates showed GDP increasing over the next three years along with higher headline and core inflation. Unemployment projections remained relatively constant, with the rate expected to fall in 2027, albeit to a lesser extent than previously envisioned. Against the backdrop of rising Middle East tensions, uncertainty around these projections increased, particularly with respect to inflation. Despite this uncertainty, the median projection continues to reflect one rate cut in 2026, followed by an additional 25 basis point reduction in 2027. Read More

February Overview With stabilizing employment data and “somewhat elevated” inflation, the Fed held rates steady at its last meeting. The minutes from the meeting highlighted a range of views amongst participants. The “vast majority” of Fed officials thought that downside risks to employment had moderated and wanted to see more progress on the inflation front before considering further rate cuts. Two Fed governors dissented from the decision and supported another rate cut. However, “several” not only backed the decision to leave the Fed funds rate unchanged but would have preferred a more balanced statement that alluded to the possibility of future rate hikes as well as cuts. With the risks to the dual mandate seemingly moving back into balance, incoming data appears set to drive future Fed decisions. A change in Fed chair, subject to Senate confirmation, injects some added uncertainty into potential Fed decisions, though. Read More

January Overview As the labor market stabilizes even while inflation remains above target, the Fed’s decision to keep the benchmark rate at 3.5%-3.75% reflects the Committee’s preference to wait for additional economic data before taking further action. Noting that the unemployment rate is steadying and payroll additions remain low, while upgrading the language related to the pace of growth to “solid” from “moderating,” the Fed still highlighted that inflation remains above their target. When viewed in the aggregate, the data led the Committee to decide to hold rates at their current levels until a clearer picture of the path of employment and inflation emerges. Read More