The US Federal Reserve kept its benchmark interest rate unchanged at 3.75–4% following its meeting. However, the decision was not unanimous: two of the 12 voters favored a 0.25 percentage point increase.

Disagreement within the FOMC is a signal the market cannot ignore. Higher rates make borrowing more expensive for households, companies, and investors, and can also pull capital away from risk assets, including equities and bitcoin (BTC).

The Fed held rates, but two officials pushed for an increase

The votes against the decision came from Fed Board of Governors member Lisa Cook and Cleveland Fed President Beth Hammack — both favored a 0.25 point increase.

In September, the regulator had already raised rates by the same amount — it was the first increase in more than three years, and at that time all 12 voters supported the hike.

This time, the language committing to returning inflation to 2% disappeared from the statement. The Fed now indicates that future decisions will depend on incoming data.

The main problem is inflation. In September, consumer prices rose 3.7% year-over-year.

This decision was the Fed's last before the US midterm elections next week.

Traders had already priced in a December hike

Before the decision was published, the futures market estimated roughly an 84% probability of a rate increase at the December 8–9 meeting, according to CME FedWatch data. The minutes of the September meeting showed that most officials expect another hike before year-end.

Consulting firm KPMG had forecast a unanimous hold, with at most one dissent. In reality, two disagreed. In July, Hammack and two other regional Fed leaders also voted for an increase, and the regulator did indeed raise rates at the following meeting.

Some officials favor a wait-and-see approach. Chicago Fed President Austan Goolsbee prefers to wait for new data.

"The Fed is acting cautiously, not with the confidence it had in 2022."

KPMG

The rate hold was already reflected in prices — there was almost no room for a surprise. After the release, bitcoin briefly reached $81,185, then corrected to $80,950 on Binance. Gold fell 0.1% to $4,036 per ounce.

Warsh's remarks and new inflation data on Thursday

Fed Chair Kevin Warsh will hold a press conference at 2:30 p.m. Eastern Time. On Thursday, the personal consumption expenditures (PCE) price index will be released — the primary inflation indicator the Fed relies on.

Michael Gapen of Morgan Stanley previously stated that a pause does not mean the end of the rate-hiking cycle. The Bank of Canada has already raised its rate to 2.5%, and the Bank of Japan will decide on Friday. The main intrigue has now shifted to the December meeting — that is when the Fed will present new projections.

Cryptalist analysis: A split in the FOMC while holding rates is a "hawkish" signal for the market: the probability of a December hike remains high, which limits appetite for risk. For bitcoin, the key triggers will be the PCE data and Warsh's rhetoric — persistent inflation could bring pressure back onto cryptocurrencies, while soft figures would open room for a recovery.