Fed keeps rates unchanged despite elevated inflation, gives little signal of next move

The Federal Reserve left its key interest rate unchanged at roughly 3.9% on Wednesday, acknowledging that inflation remains elevated while providing few signals about its next steps. The decision comes just six days before midterm elections dominated by voter concerns over the cost of living.

In a statement following its two-day meeting, the central bank said holding rates steady would allow time to accumulate more information to ensure a timely return of inflation to its 2% target. The Fed, led by Chairman Kevin Warsh, had raised rates last month for the first time in three years, defying President Donald Trump's demands for cuts.

Two Fed officials dissented from the decision. Governor Lisa Cook and Cleveland Fed President Beth Hammack voted for a quarter-point increase, marking Cook's first dissent since her 2022 appointment. The Trump administration previously attempted to remove Cook, though the Supreme Court ruled she could remain in her post while litigation continues.

Financial markets and Fed projections from last month had signaled another rate hike in December, but Wednesday's statement left that outlook unclear. Warsh was expected to address the path forward during an afternoon news conference.

Higher borrowing costs are already affecting the economy. The average 30-year mortgage rate hit a three-year high of 7.4% earlier this month, and Oxford Economics estimates higher rates have made homebuying unaffordable for 5 million more Americans since the start of the year.

Sources: Las Vegas Review-Journal