Fed Holds Rates Steady but Warsh Stresses Firm 2% Inflation Goal as Memory Stocks Surge

The Federal Reserve kept interest rates unchanged on Wednesday, concluding a two-day October meeting with its target range for short-term rates still at 3.75% to 4%. U.S. stocks were roughly flat in the afternoon, slipping slightly from their levels before the announcement.

In its policy statement, the central bank said that "inflation remains elevated" but indicated it wants more information before taking any further step. Two policymakers dissented, preferring an increase in rates. The Fed last raised its overnight lending rate in September, the first such move in three years.

At his news conference after the meeting, Fed Chairman Kevin Warsh underscored that the central bank's inflation goal is 2%, and nothing higher. "There is no soft inflation target," he said. Warsh also said the Fed plans to reduce the number of rate-setting meetings in the coming years.

Markets continue to see another increase as likely. The odds of a rate hike in December stood at more than 80% both before and after the Fed's announcement.

Elsewhere, memory and storage stocks rallied after South Korea's SK Hynix reported sharply higher quarterly revenue and operating profit, along with expanded plans for returning capital to shareholders. Management said it expects memory demand to keep outpacing supply. SK Hynix shares that trade in the United States rose more than 12.5%.

U.S. rival Micron gained nearly 6%, stretching its winning streak to four straight sessions. The stock remains about 19% below its record closing high of $1,213 set in June, yet it is still up 240% so far this year.

In technology, Apple released its first touchscreen laptop on Wednesday, reversing its long-held position that it would not build one. The new touchscreen MacBook Pro models are the third major product launch since John Ternus became CEO on Sept. 1. They start at $2,899, compared with $1,999 for the new non-touchscreen 14-inch MacBook Pro with the latest M6 chip.

Attention now turns to a heavy slate of corporate earnings. Alphabet, Microsoft and FedEx are among those reporting after the close on Wednesday, along with Ford, T-Mobile, Carvana, Honeywell Aerospace, MGM Resorts, ServiceNow, eBay, Chipotle and Fortinet. Eli Lilly, Linde, Caterpillar, Merck and Bristol Myers are due before the open.

On the economic calendar, Thursday morning brings the September PCE price index and the first estimate of third-quarter GDP.