Fed Holds Rates at 4% as Warsh Rejects Looser Inflation Goal

The Federal Reserve kept its benchmark interest rate at 3.75% to 4.00% on Wednesday after a two-day meeting. The central bank said inflation remains elevated but needs more data before acting. Two policymakers voted for a rate increase instead of a hold.

Chairman Kevin Warsh defended the bank’s 2% inflation target during a post-meeting press conference. He stated, “There is no soft inflation target.” Warsh also announced plans to reduce the number of rate-setting meetings in future years.

Traders expect another hike soon. The probability of a rate increase in December stood above 80% both before and after the announcement. The Fed last raised rates in September, its first move in three years.

Stocks reacted to corporate news despite the rate decision. Shares of South Korea’s SK Hynix rose more than 12.5% in U.S. trading after the company reported higher quarterly revenue and operating profit. Management said memory demand will outpace supply and plans to return more capital to shareholders.

U.S. rival Micron Technology gained nearly 6%. The stock has risen for four consecutive sessions. It remains 19% below its record closing price of $1,213 set in June. However, the share price is up 240% this year.

Apple released its first touchscreen laptop on Wednesday. The company had previously said it would not build such a device. The new MacBook Pro models start at $2,899. The non-touchscreen 14-inch version with the M6 chip starts at $1,999. These are the third major product launches under CEO John Ternus, who took office on Sept. 1.

Investors will turn to a dense earnings schedule next. Alphabet, Microsoft, and Ford report after the close on Wednesday. Eli Lilly, Merck, and Caterpillar report before the open. Thursday brings the September PCE price index and the first estimate for third-quarter GDP.