JPMorgan Asset Management: The market still currently expects a relatively high probability of a Fed rate hike in December.

Kerry Craig, Global Market Strategist at JPMorgan Asset Management, said the Federal Open Market Committee (FOMC) voted 10-2 to keep the federal funds rate in the 3.75%-4.00% range. Craig believes the decision represents a "pause" rather than a "pivot," and the market still currently expects a relatively high probability of a rate hike in December. At this meeting, Governor Lisa Cook and Cleveland Fed President Hammack supported a 25 basis point rate hike, reflecting differing views within the committee. Craig believes this may mean the question is not whether the Fed will hike again, but when. However, the decision also shows that the Fed's urgency to act has somewhat diminished. The official statement was relatively short, with only minor adjustments compared with the previous meeting. The assessment of economic conditions was upgraded from "solid" to "strong," while inflation was described as "elevated"; the statement also reiterated the FOMC's clear commitment to "achieving price stability." Craig noted that this appears to conflict with the lower sense of urgency conveyed by Fed Chair Warsh. Warsh believes monetary policy has begun to take effect, financial conditions have tightened, and inflation expectations have not become unanchoredthat is, they have not yet de-anchored. Warsh also outlined adjustments to how the Fed will hold meetings and discuss monetary policy in the future. The Fed will maintain its schedule of eight meetings per year, but starting in 2027, one meeting each year will be dedicated to discussing macro monetary policy strategy, with no updated economic projections and no rate adjustments at that meeting; the other seven meetings will be substantive decision-making meetings at which rates may be adjusted. By 2028, the arrangement will be adjusted to six substantive decision-making meetings and two dedicated strategy discussion meetings. Craig said it is not yet clear whether relevant materials from these strategy discussion meetings will be made public. Because the meetings do not involve rate decisions, they may receive much less attention. This marks a new phase of "forward silence" for the Fed, and the Fed's communication methods in the future, especially the Summary of Economic Projections and the "dot plot," may change further.