To Hike or Not to Hike

The Federal Reserve kept rates on hold at 3.5%–3.75% Wednesday for the fifth straight meeting. Unlike previous decisions however, a hold was far from guaranteed, as 3 of the more Hawkish members of the FOMC (Hammack, Kashkari, and Logan) dissented in favor of a 25 basis point increase.

Although a hold remained the market’s base-case expectation, investors entered the meeting with a high degree of uncertainty. Fed Funds Futures priced in a 31% chance of a rate hike going into Wednesday’...

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