On Wednesday, the Federal Reserve kept its benchmark rate at 3.75%–4%, choosing not to tighten further even as inflation remained stubborn and the economy continued to expand strongly.¹

The 10-2 decision carried unusual institutional weight. Governor Lisa Cook and Cleveland Fed President Beth Hammack both sought a quarter-point increase—the first time since 1992 that a Fed governor and a regional-bank president had dissented together in the same direction. The committee again said that “inflation remains elevated,” while upgrading its assessment of economic activity to a “strong pace.”²

The dissenters’ case is straightforward: waiting risks allowing price pressures to become embedded. Laura Ullrich of Indeed Hiring Lab said the latest inflation readings had worsened, not improved, and called a December increase highly likely. Her colleague Aubrey Woessner said holding steady was difficult to reconcile with the Fed’s repeated commitment to restoring price stability.²

Warsh offered the opposing interpretation at his post-meeting news conference. The Fed, he said, had chosen to “take stock” and seek more clarity, with an “overwhelming consensus” that its “monetary medicine is starting to work some,” though he stressed there were “no firm conclusions.”²

That patience extends to the AI boom. Warsh rejected the notion that exceptional expected returns make tech investment immune to borrowing costs: “Interest rates get in the cracks. Interest rates affect directly, or indirectly, almost everything.” Higher rates may not halt data-center and computing projects, but they can force investors to discriminate more sharply between credible cash-flow plans and speculative ones.³

Julius Bendikas of Marsh backs the wait-and-see approach, arguing that balanced labor markets and anchored long-term expectations leave “no need to rush.” Yet he also warned that strong growth, energy prices and large fiscal deficits leave the Fed little room for complacency.³