November 2023

Another Pause, but What About December?

The Federal Reserve once again has held interest rates steady but underscored that the rate-hiking cycle may not be over.



Key Takeaways

  • For the second consecutive meeting, the Federal Reserve’s Federal Open Market Committee (FOMC) held the federal funds target rate range at 5.25% to 5.50%.
  • Chair Jerome Powell indicated that a rate cut in December wasn’t off the table, in part, because “the process of getting inflation sustainably down to 2% has a long way to go.”
  • In its post-meeting statement, the FOMC upgraded the pace of the economy’s expansion from “solid” to “strong.”

At their November meeting, FOMC members unanimously agreed to leave the fed funds rate range unchanged at 5.25% to 5.50%, where it’s been paused since July.

With inflation moderating, investor sentiment currently shows a 80% chance of the Federal Reserve (Fed) keeping interest-rate hikes on pause through the end of the year, according to the Chicago Mercantile Exchange (CME) FedWatch tool. However, Chair Powell said that expectation was premature.

“We didn’t talk about making a decision in December today,” Powell said at a post-meeting press conference. “The idea it would be difficult to raise again after stopping for a meeting or two is just not right.”

He added, “The full effects of our tightening have yet to be felt. Given how far we have come, along with the uncertainties and risks we face, the committee is proceeding carefully.”

In September, FOMC expectations were for one more 25-basis-point hike this year (which would be the 12th rate hike since March 2022) and two rate cuts in 2024. New projections weren’t released after the November meeting.

The FOMC’s November statement made only a few changes from its September statement.

Source: FOMC as of 11/1/23.

Market Reaction

After the Fed announcement, the 10-year Treasury ended the day lower at 4.77%; short- and long-term rates were mixed as the curve flattened to end the day.

Source: U.S. Department of the Treasury as of 11/1/23.
10-Year Treasury Yield over the Past 12 Months
Source: FRED as of 11/1/23. U.S. Department of the Treasury as of 11/1/23.

Equities closed higher on the final day of the FOMC meeting. The Dow Jones Industrial Average and S&P 500 Index finished the day up 0.67% and 1.05%, respectively.


The FOMC’s November meeting contained few surprises. As expected, the Fed again paused rates and didn’t signal the end of rate hikes was imminent. The FOMC continued to promise to “monitor the implications of incoming information for the economic outlook. The committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the committee’s goals.”

With inflation trending downward toward the FOMC’s 2% goal and the economy remaining resilient, the Fed now may have the luxury of time when deciding whether to raise, pause and lower rates, perhaps increasing the chances for a soft economy landing.

“Everyone has been very gratified to see that we’ve been able to achieve pretty significant progress on inflation without seeing the kind of increase in unemployment that is very typical” during a rate-hiking cycle, Chair Powell said. “The same is true of growth.”

This information is presented for informational purposes only. This is not to be construed as an offer to buy or sell any financial instruments and should not be relied upon as the sole investment making decision. All material is compiled from sources believed to be reliable, but accuracy cannot be guaranteed. The opinions expressed herein are based on current market conditions and are subject to change without notice.