Head of Market Analysis
Rhona O'Connell, Head of Market Analysis, EMEA & Asia
Tel: +44 203 580 6115 / mobile +44 7384 833897
30th October 2026
FOMC October meeting; comparison of the September and October Statements, and a look at Kevin Warsh’s Press Conference remarks plus Q&A. Meeting schedule is to change
One takeaway from the Q&A is that the hard 2% inflation target is as measured by PCE but he did not specify whether headline or core.
The meeting schedule is to change and we look at this first.
To quote Kevin Warsh; “…at every turn, good or bad, our job is to get monetary policy right. And that’s exactly what we’re doing.
“Now, with this objective in mind, we have decided on a change in our FOMC schedule, starting next fall. We believe eight meetings per year is the right number for the FOMC. But in 2027, one meeting will focus exclusively on broad monetary policy strategy, with neither a vote on the federal funds rate nor a policy statement anticipated. The rest will be regular FOMC policy-setting meetings and I expect that in 2028, we’ll have two meetings dedicated to discussions of strategy, and six for setting policy”.
“The basis behind this is that near-term developments need to be at regular and information -rich intervals, but it’s equally important to reserve time and space to think “anew” about big questions, looking out over longer time horizons”.
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The relationship between the two Statements
In the latter case, this is not surprising. The Fed follows data closely and looks for trends. With only one set of data between the September and October meetings, the reference to wanting more data before any further decisions is not surprising. The assessment of inflation is the element that points particularly to data dependence, stating that the “accumulation of more information will help the Committee determine the policy stance appropriate to ensure a timely return” to the target of 2%.
One other key tangible difference is the shift in description of the pace of economic activity from “solid” to “strong”. Otherwise, the accompanying assessment of domestic spending, productivity, investment, employment and unemployment is unchanged in substance.
Similarly, the two Statements are broadly aligned. Both maintain the Federal Reserve’s dual-mandate framing and its policy of maintaining ample reserves in the banking system. The economic assessment is also similar, with elevated uncertainty; partly due to geopolitical developments, but also resilient domestic spending, strong productivity growth, robust capital investment, job gains keeping pace with the workforce, little change in unemployment, and inflation remaining elevated.
The hawkish tone was as expected, with September’s unanimous rate rise vote followed this time by a 10-2 vote in favour of holding steady with Lisa Cook (Board of Governors) and Beth Hammack (Cleveland) voting for a hike
Extracts from Kevin Warsh’s opening remarks
“At each policy meeting, my colleagues and I assess the economy by looking out the window—it’s what we call “interrogating reality”—to gauge what’s really going on. It is not a task that has grown easier.
“So what exactly do we observe? Economic growth has strengthened. The GDP increase in the first half of this year was revised up from an earlier estimate of 1.8 percent up to 2.4 percent. And the third quarter appears to have brought an even more rapid advance, led by healthy consumer spending, likely running above 3 percent growth, and business investment, likely rising at about a double-digit pace.
“Capital expenditures are at a historically high share of GDP. High-tech investment is leading the acceleration. But there’s also been a broadening in other categories. And these trends bear watching….
…”on the employment side of the Fed’s dual mandate, conditions are quite positive.
“And yet Americans, of course, are still dealing with inflation that has been running above the Committee’s objective for close to 6 years. It’s our responsibility to get inflation down. That’s the reason the FOMC’s discussion over the last couple of days focused mainly on the price stability side of our remit.
“…financial conditions…have tightened for some businesses and households, much as we would expect. Market participants are becoming somewhat more discerning in their capital allocations. And while overall financial conditions are tighter, I’m unwilling and unable to call them tight. But broadly, these developments go in the direction of achieving a longer, more durable period of economic growth and price stability”…
Q&A
Given the lack of progress over inflation and the signs that most of your colleagues are on board for a December hike, why not just do it today?
“Ensuring price stability… quashing inflation is not about some fixed individual date… [or some isolated data point… if it were, we wouldn’t be suffering from nearly six years of inflation above target… this is about ensuring that we have clear objectives and it’s about a monetary policy strategy. [in the five months since I’ve been around, we have made changes in the strategy]..
we’ve doubled down on the 2% inflation target, not aiming for something in the “two’s” but 2% itself... we set out a framework… then “we interrogate reality…periodically... and we act [as in September].
The signposts suggest that this is taking inflation compensation (swaps, other measures) in the right direction. [Fed influence] is taking inflation expectations in the right direction. The coming period is “information-rich” and will pride a matrix for further reaction “I’m encouraged by the progress we’ve made in a short period of time”.
So he elaborated a little, but mot that much.
Is the current level of the fed funds rate the right one?
The overwhelming judgment in the [meeting] is that “this modest monetary medicine is starting to work some, but there’s no firm conclusions. The judgment of the overwhelming number of colleagues is that this coming period will be able to help frame the next stance and that if we had come to a firm conclusion, we would have announced it with some fanfare.
When can we expect the reports of the working groups and is there anything you can preview for us?
They are all hard at work and I have scarcely seen anything that would constitute a final report but I have checked in periodically. I am expecting that the majority will report on time (year-end); I’m impressed with what they’re doing. One small announcement which I previewed at the IMF meeting; on 16th November the Productivity and Jobs task force will be doing a field hearing, with a broad range of people with strong views; I plan attending – so they’re broadening their reach with the emphasis on listening to and absorbing the views expressed.
Households’ inflation expectations remain well above 2% for the longer term as well as the short; do you worry that today’s decision might be interpreted as the Fed actually having a soft inflation target?
What I can do is tell you that there iso soft inflation target and no implicit inflation target. There’s a target of price stability and it’s 2% as measured by PCE. Clearly households “look out of the window” – then he references high gas prices and “so inflation’s gone up in expectations in the very near term because they’re doing what we’re doing – interrogating reality. But if you look out over the horizon you can see that in most but not all measures, households have the confidence that this central bank will deliver price stability”.
Do you see a straight-line correlation between oil prices and inflation and if oil comes down how quickly could inflation retreat?
the correlation this year has been between oil and [bond yields] until very recently with rates coming off even as oil and crack spreads have remained high. To the extent that oil prices decline [geopolitics reference] that is something that we will have to interrogate, but this is hypothetical – and note that oil futures prices are still rising.
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