Federal Reserve Holds Rates Steady at 9-3 Vote, Stock and Long-Term Bond Markets Shaken

The Federal Reserve has frozen the benchmark interest rate at 3.50-3.75% after its latest meeting, causing turbulence in the U.S. stock and long-term bond markets. Analysts suggest that the market unease was exacerbated by Chairman Kevin Warsh not providing signals regarding future policy direction. On July 29, the Federal Open Market Committee (FOMC) announced it would maintain the target range for the benchmark interest rate, with a vote of 9-3. The dissenting votes came from the presidents of the Cleveland, Minneapolis, and Dallas Federal Reserve Banks, who preferred a 0.25% point increase. The statement noted that while the U.S. economy is expanding steadily, uncertainties have increased due to conflicts in the Middle East and energy supply shocks. During a press conference, Chairman Warsh mentioned the need to review forward guidance in light of the 2% inflation target. This statement was interpreted as a signal that clear guidance on interest rate direction may diminish. U.S. stocks fell sharply on the day, with the Dow Jones Industrial Average closing down 1,153.18 points at 51,594.14. The long-term bond market reacted even more sensitively, with the 30-year yield rising to its highest level since 2007. The cryptocurrency market showed a more limited reaction compared to stocks, with Bitcoin remaining relatively stable around $64,250.

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