Jinshi reviews the reasons for Fed rate hikes versus holding rates steady

On October 29, according to Jinshi Data, a summary outlines the Federal Reserve's multiple rationales for both raising interest rates and holding them steady. The argument for a rate hike cites elevated September CPI and PPI figures, underscoring that progress in curbing inflation has stalled for a second consecutive year; hawkish members contend that given widespread market expectations of a December rate increase, delaying action by another six weeks could heighten the costs of policy lag, and current monetary settings have not yet reached a "restrictive" threshold.

Arguments for keeping rates unchanged note that if policymakers still anticipate two to three additional rate hikes, spacing out the remaining increases entails minimal downside; former Fed official Kaplan stated that a six-week delay carries manageable risks; conversely, a series of consecutive hikes could signal to markets that the tightening cycle is advancing faster than officials initially projected.

The summary also indicates that prior comments from officials suggested no immediate need to act, while Walsh's silence has further strengthened market expectations for rate stability; the Fed has never executed an unanticipated rate hike ahead of an election, and a sudden pre-election increase could trigger market volatility.