Warsh reforms to enter a new phase next year

While today’s decision by the FOMC to leave interest rates unchanged was accompanied by two hawkish dissents, this was not a huge surprise, only confirming our strong suspicion ahead of the meeting that not every member is on board with a gradualist approach to tightening. A 25bp hike in December therefore remains highly likely, and we expect one further move next March. Arguably the bigger news was the announcement that the FOMC will replace one interest rate-setting meeting with a “strategy session" in 2027, rising to two in 2028, putting the Fed on a path towards holding just six policy meetings a year.