Fed Holds Rates at 3.75% to 4% as Inflation Remains Elevated

The Federal Reserve kept its target range for short-term interest rates at 3.75% to 4% following a two-day policy meeting that ended Wednesday afternoon. The central bank’s decision to hold rates steady leaves the market pricing in a high probability of future tightening, with odds for a December rate hike remaining above 80% both before and after the announcement. This follows the Fed’s first rate increase in three years, which occurred in September.

Two members of the committee dissented from the decision, arguing that the economy warranted an immediate rate hike. The official policy statement noted that inflation remains elevated, though the Fed indicated it requires more data before taking further action. This stance aligns with the recent tightening of monetary policy, as the Fed moves to manage persistent price pressures.

During the post-meeting news conference, Fed Chairman Kevin Warsh emphasized the central bank’s commitment to its long-term price stability goal. He stated that the target inflation rate is 2% and nothing higher. Warsh stressed that there is no soft inflation target, signaling a firm stance against accepting higher inflation as a baseline for future policy decisions.

Warsh also announced that the Fed will reduce the number of scheduled rate-setting meetings in coming years. This structural change aims to streamline the decision-making process, though the immediate focus remains on the balance between growth and price stability. The market’s reaction to the statement was muted, with stocks trading nearly flat after the initial dip.

In the technology sector, memory and storage stocks experienced a sharp rally following strong earnings from South Korean firm SK Hynix. The company reported soaring quarterly revenue and operating profit, alongside larger capital return plans for shareholders. SK Hynix management indicated that demand for memory components is expected to continue outpacing supply for the foreseeable future.

Shares of SK Hynix, which trade in the United States, climbed more than 12.5% in the session. U.S.-based rival Micron Technology followed suit, with shares rising nearly 6% to extend a winning streak to four consecutive trading sessions. Despite being approximately 19% below its record high close of $1,213 set in June, Micron’s stock remains up 240% year to date.

Apple Inc. released its first touchscreen laptop on Wednesday, marking a significant shift in the company’s hardware strategy. This launch reverses years of statements suggesting the firm would not integrate touchscreens into its Mac lineup. The new touchscreen MacBook Pro models are the third major product launch since John Ternus assumed the role of CEO on September 1.

The new touchscreen laptops are positioned at a higher price point than the standard lineup. Models start at $2,899, compared to the $1,999 starting price for the new non-touchscreen MacBook Pro 14-inch, which features the latest M6 chip. This pricing structure mirrors the tiered approach seen in Apple’s smartphone releases, where higher-end devices command a premium over their base counterparts.

A busy evening of corporate earnings reports awaits investors. Major technology firms Alphabet, Microsoft, and FedEx are scheduled to release results, alongside Ford, T-Mobile, and Chipotle. Before the market opens on Thursday, Eli Lilly and Linde will present their quarterly figures. Economic data releases are also set for Thursday morning, including the September Personal Consumption Expenditures price index and the first estimate of third-quarter gross domestic product.