US stocks added to earlier gains on Wednesday afternoon after the Federal Reserve voted to hold rates steady in a range of 5.25%-5.50% as the central bank waits to see how its credit tightening initiatives impact the economy.
Treasury yields edged lower following the Fed rate statement, with the 10-year trading around 4.8%.
One notable difference to its September statement, is the addition of the word “financial” to the following sentence: “Tighter financial and credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation.”
The addition of the word “financial” indicates the Fed is concerned over rising bond yields and suggests that interest rate increases are working as intended.
The decision also included an upgrade to the committee’s general assessment of the economy, saying it grew at a “strong” pace in the third quarter as opposed to a “solid” pace in the September statement.
It was the second consecutive meeting that the Federal Open Market Committee chose to hold, following a sequence of 11 rate hikes, including four in 2023.