U.S. Fed holds interest rates to await more data on path of inflation — SkimNews
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- Federal Reserve held its benchmark rate at 3.75-4.00% in a 10-2 decision, delaying any change to borrowing costs until after the Nov. 3 midterm elections while keeping the door open to further rate hikes.
- Federal Open Market Committee upgraded its assessment of the economy to "strong" from "solid," said inflation "remains elevated," and pledged that "the Committee will deliver price stability" as more data arrives on the path back to its 2% goal.
- Lisa Cook cast her first dissent on a central bank policy decision, favoring a quarter-percentage-point rate hike; Cleveland Fed President Beth Hammack, a consistently hawkish voice, dissented for the same increase.
- Kevin Warsh's latest policy statement included a hint of forward guidance he has said he wants to avoid — a notable change from the Sept. 15-16 meeting.
- U.S. stocks pared gains slightly after the decision, the 10-year Treasury yield extended its rise to 5.028%, and short-term interest-rate futures rose as traders pulled back bets on Fed rate hikes.
- Kelly Brown, CEO of deposit management company Ampersand, said "a hold isn't relief" — with inflation at 3.7% and oil above $100 a barrel, "businesses can't count on borrowing costs coming down anytime soon."
- Investors expect additional rate hikes beginning in December and continuing into 2027, and the Fed has missed its 2% goal for five and a half years, with officials concerned that households and businesses are becoming accustomed to faster price increases.
Why it matters: Both dissents wanted a quarter-point hike, including Lisa Cook, the governor Trump is trying to remove, leaving the Fed split 10-2. With inflation at 3.7% and oil above $100 a barrel, the hold buys time before the Nov. 3 midterms without lowering anyone's borrowing costs, and Democrats would gain stronger oversight of the Fed if they take both chambers.
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