The US Federal Reserve on Wednesday kept interest rates unchanged, opting to wait for more evidence on inflation as price pressures remain stubbornly high. The Federal Open Market Committee (FOMC), the Fed’s rate-setting body, voted on Wednesday to maintain its benchmark interest rate in a range of 3.75% to 4%. The rate has remained at that level since the central bank approved a quarter-percentage-point increase in September.
The decision comes just days before the US midterm elections on 3 November, when voters will determine control of Congress.
The widely expected decision signals a cautious approach as policymakers weigh the need to bring inflation down against the broader economic outlook.
“Inflation remains elevated,” the Fed said in its post-meeting statement. “The accumulation of more information will help the Committee determine the policy stance appropriate to ensure a timely return of inflation to the Committee’s 2 percent goal. The Committee will deliver price stability.”
Two of the 12 FOMC voters dissented, with Governor Lisa Cook and Cleveland Fed President Beth Hammack favouring a further quarter-percentage-point increase.
Cook’s dissent came amid an ongoing dispute with President Donald Trump, who has sought to remove her from the Fed over allegations concerning information she provided on home loan applications.
The Supreme Court blocked Trump’s earlier efforts to dismiss Cook, but his administration has renewed its attempt. A hearing is scheduled for early November.
Cook, appointed by former President Joe Biden in 2022, registered her first dissent since joining the central bank.
Dallas Fed President Lorie Logan and Minneapolis Fed President Neel Kashkari, who have previously expressed support for higher rates, backed the majority decision on Wednesday. Both had joined Hammack in dissenting at the committee’s previous rate decision in July.
The Fed regards its political independence as a cornerstone of its work. However, some observers have speculated that policymakers could be reluctant to raise rates so close to the election.
Trump has repeatedly clashed with the central bank over monetary policy, arguing that interest rates should be substantially lower. He also nominated Warsh to the position, according to the account of the appointment.
The Fed’s decision to hold rates steady leaves policymakers waiting for further evidence on inflation before determining their next move.
Fed Hits Pause on Interest Rates as US Midterms Loom and Inflation Stays Hot
