What changed in the FOMC statement? Further rate hikes signaled amid confidence that “the economy is solid”

[Financial News]  

The U.S. Federal Reserve (Fed) concluded its two-day Federal Open Market Committee (FOMC) meeting on the 28th (local time) and, as expected, held its benchmark interest rate steady at 3.75%–4.0%.
After raising rates for the first time in more than two years on the 16th of last month and signaling that it could raise them again at this meeting, the Fed decided to pause for now as recent signs pointed to inflation easing.
However, the FOMC statement signaled that another rate hike could follow soon.
First, two of the 12 FOMC members with voting rights opposed holding rates steady.
According to the statement, Fed Governor Lisa Cook and Beth Hammack, president of the Federal Reserve Bank of Cleveland, opposed holding rates steady, arguing for an additional 0.25-percentage-point increase.
The FOMC also assessed that the U.S. economy was in better shape than at its meeting in September. The statement at the time said, “Economic activity has been expanding at a solid pace,” but this time it changed “solid” to “strong.” It said, “Uncertainty remains elevated, partly reflecting developments in the geopolitical situation, but domestic spending has shown resilience.”
The statement went on to emphasize that it would monitor the situation for now, saying, “Gathering more information will help determine the appropriate policy stance to ensure that inflation returns to the FOMC’s 2% goal in a timely manner.”
According to CME Group’s FedWatch Tool, expectations for a rate hike in December strengthened after the FOMC statement signaled another increase.
The probability of rates remaining at their current level fell from 16.2% the previous day to 11.6% that day, while expectations for a 0.25-percentage-point rate hike rose from 78.3% to 87.9%.
The Fed is scheduled to hold its final FOMC meeting of the year on December 8–9.
Meanwhile, the Nasdaq turned higher on the New York stock market after the FOMC announcement. The Nasdaq, which had been slightly lower, rebounded, and all three major indexes moved higher.

[email protected] Song Kyung-jae Reporter