[Markets Expect the Fed to Hold Rates Steady This Week; Chairman Warsh Must Explain Why No Rate Hike] BlockBeats reports on October 27th, citing a New York Times report, that the market widely expects the Federal Reserve to keep interest rates unchanged at this week's (October 27-28) FOMC meeting. Fed Chairman Kevin Warsh faces a communication challenge: explaining why the Fed chose not to raise rates given persistently high inflationary pressures, demonstrating its unwavering commitment to combating inflation, and leaving open the possibility of another rate hike later this year. The report states that the Fed raised rates once in September, and the market initially priced in another rate hike in October; however, statements from New York Fed President Williams, Vice Chairman Jefferson, and Governor Warr in late September and early October suggesting that "we can wait," reduced the probability of an October rate hike from over 70% to less than 30%. Meanwhile, high oil prices and increased demand for materials and electricity driven by AI infrastructure projects pushed up inflationary pressures in September. The Nasdaq 100 index has fallen more than 7% since its record high on October 6, and the 10-year US Treasury yield had previously remained above 5% for several consecutive weeks. Stephen Stanley, chief economist at Santander U.S. Capital Markets, said he expects interest rates to remain unchanged this week, but believes a rate hike in December is still possible; Warsh needs to explain "why he didn't act in October, and why December is still under consideration." Since taking office in May, Warsh has rarely provided forward guidance on the interest rate path. His brief press conference after holding rates steady in July caused market volatility, but his hawkish remarks in August and signals of a September rate hike and "one more hike this year" in the dot plot temporarily restored communication. This week's decision comes close to the US midterm elections on November 3. Trump has previously criticized the September rate hike, and analysts believe Warsh needs to avoid the outside world interpreting the holding-up as a political maneuver. [Original link]