Analysts interpret the Fed's October decision: New rules signal a major institutional shift, and behind the hold steady is a "patience consensus" within the hawkish camp.

October 29 - In the early hours of today Beijing time, the Federal Reserve announced that it would keep rates unchanged at its October policy meeting, with the decision passed by a 10-2 vote (2 Fed presidents favored a 25 basis point rate hike). Compared with September, this statement upgraded its economic assessment from "moderate" to "strong," removed the phrase that "this policy action will help inflation return to the 2% target," and instead emphasized the need to accumulate more information.

Analyst @qinbafrank posted on social media that the Fed's move this time reveals a major institutional shift signal. Chair Warsh announced major mechanistic changes at the press conference: starting in 2027, the Fed will have one meeting focused on macro monetary policy strategy, with no rate vote and no statement; in 2028, such strategy meetings will increase to two, and policy meetings will be reduced to six accordingly. Combined with the five working groups whose results will gradually come out by the end of the year, the analyst believes that reducing the number of rate decisions is the beginning of a broader institutional shift at the Fed.

On fundamentals, Warsh expressed optimism about the economy, noting that first-half GDP growth was revised up to 2.4%, and that employment conditions are "quite positive." On financial conditions, Warsh acknowledged that some degree of tightening has appeared, and admitted that AI infrastructure investment has been affected by rising rates. But Warsh refused to characterize overall financial conditions as "tight," arguing that this helps achieve price stability.

Regarding Warsh's overall remarks, the analyst believes he did not clearly explain the specific reason for not raising rates this time, only saying that more information needs to be collected. Warsh's statement that he "is neither willing nor able to call financial conditions very tight" was slightly hawkish, but he also stressed that financial conditions are tightening, offsetting the above tone. Overall, @qinbafrank believes Warsh's attitude is neutral and has not yet reached the intensity of a "hawkish pause"; this pause is not a dovish shift, but a "patience consensus" within the hawkish camp.

In addition, the analyst stressed that Warsh is establishing a new communication framework, namely opposing forward guidance, not submitting a dot plot, and not prejudging meeting outcomes. This sends a signal that the Fed is deliberately narrowing its short-term intervention in financial markets and placing more emphasis on data dependence. As for whether rates will be raised in December, @qinbafrank believes this first depends on inflation data, and inflation is in turn affected by the Middle East situation. Warsh, who makes decisions based on current data, will find it difficult to give clear expectations in advance.