WASHINGTON — The Federal Reserve held its benchmark federal funds rate steady at 5.25 percent to 5.50 percent, a widely expected pause that two-year Treasury yields confirmed with minimal movement.
Policymakers cited persistent inflation above their two percent target and incoming data as reason to maintain the current restrictive stance. The "higher for longer" narrative remains intact, keeping duration risk elevated across fixed-income portfolios.
The 10-year Treasury yielded 4.80 percent, reflecting persistent market skepticism about near-term rate cuts. The three-month to 10-year spread sits at negative 120 basis points—the inversion signals the market's expectation of sustained restrictive policy, not a near-term pivot.
Fed funds futures now price June as the first likely month for a 25 basis point cut, with only 32 percent probability attached to any reduction before the second quarter of 2025. The market has shifted focus to November and December data releases, particularly the CPI report on Nov. 14.
Equity markets moved little on the announcement. The S&P 500 rose 0.3 percent to 7,744, and the Nasdaq Composite gained 0.3 percent to 26,550, confirming the pause was fully priced in.
The Federal Open Market Committee meets Dec. 12-13 to update its economic projections and dot plot.
