Key Highlights

● Lisa Cook and Beth Hammack both dissented in favor of a hike.

● The final vote was 10-2 to hold rates steady.

● It marked Cook's first dissent since joining the Fed in 2022.

● Markets treated the dissents as a hawkish signal.

The Federal Reserve's decision to leave rates unchanged was not unanimous. Two policymakers wanted to go further: Governor Lisa Cook and Cleveland Fed President Beth Hammack both preferred a rate hike, with the final vote at 10-2, marking Cook's first dissent since joining the Fed in 2022.

The statement recorded the two dissents and described the economic backdrop the committee was weighing, saying economic activity is expanding at a strong pace while inflation remains elevated.

The Backdrop to the Vote

Energy prices add to the picture, with crude settling back above $100 a barrel after Yemen's Houthis claimed an attack on a Saudi refinery, a claim Riyadh has not confirmed. The Fed said domestic spending has held up despite elevated uncertainty, and that productivity growth and capital investment are strong.

The other ten voters, led by Chair Kevin Warsh in his fourth meeting, opted to hold after September's increase, the Fed's first hike since 2023, saying the Committee will gather more information to judge the stance needed for a timely return to its inflation goal.

How Markets Read the Split

Traders treated the dissents as a signal, with odds of a December hike rising and long-dated Treasury yields climbing past a key psychological threshold. Equities were calmer, with Carson Group's Ryan Detrick noting the Fed didn't throw any curveballs.

The Fed was not alone in leaning toward tighter policy that day, as the Bank of Canada also raised rates for the first time since 2023, while New Zealand's central bank surprised markets by holding steady.