The Fed Holds Rates, but Its Minutes Show Firm Support for Raising the Price of Money

Bret Kenwell, US Markets Analyst at etoro, on the Federal Reserve’s decision to hold interest rates.

The Fed Holds Rates, but Its Minutes Show Firm Support for Raising the Price of Money

As expected, the Federal Reserve (Fed) left interest rates unchanged, shifting the focus to December. That will be the Fed’s last rate decision of 2026 and will include updated economic projections, giving investors a clearer view of how policymakers see inflation, growth and the path of rates.

Inflation and oil prices are rising, and the Fed’s minutes showed firm support for higher interest rates. However, markets had already ruled out a hike in October, opting for a cautious stance while awaiting corporate earnings and the midterm elections. The Fed still has room to raise rates before its policy becomes overly restrictive.

December will be the real test: will Chair Warsh confirm expectations of a hike, or will he reignite uncertainty? With the Fed’s new communication style, the biggest risk is that, by the time December arrives, the decision looks like a coin toss, leaving markets more exposed to volatility. That said, there is still plenty of time between now and then, and the data will be decisive for the final outcome.

The next tests will come soon: PCE (Personal Consumption Expenditures price index) data will be released tomorrow, and jobs data next week. In hindsight, investors may see today’s decision more clearly, as those reports could reveal whether this pause was a prudent move or, on the contrary, a failure to act. Inflation persists, and the 10-year Treasury yield is starting to settle near 5%. If yields reach new year-to-date highs, this could pose a fresh headwind for stocks and cryptocurrencies.

This communication is for information and educational purposes only and should not be construed as investment advice, a personal recommendation, or an offer of, or solicitation to buy or sell, any financial instruments. This material has been prepared without taking into account any particular recipient’s investment objectives or financial situation, and has not been prepared in accordance with the legal and regulatory requirements to promote independent research. Any references to past or future performance of a financial instrument, index or a packaged investment product are not, and should not be taken as, a reliable indicator of future results. eToro makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication. Cryptocurrency investments may not be suitable for retail investors, and the entire capital invested could be lost. It is important to read and understand the risks of this investment, which are explained in detail at this link. Your capital is at risk.