The Federal Reserve left its benchmark interest rate unchanged in the 3.75% to 4.00% range on Wednesday in a 10-2 vote, pausing after a 25 basis point increase in September. Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented in favor of a 25 basis point rate hike.
In its policy statement, the Federal Open Market Committee noted that economic activity is “expanding at a strong pace” while inflation “remains elevated,” and said that “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% goal.” Short term interest rate futures rose following the announcement.
The decision comes six days before the US midterm elections as policymakers weigh stubborn inflation against a softening labor market. September headline consumer prices rose 3.7% from a year earlier and core CPI climbed 2.6%, while nonfarm payrolls added 29,000 jobs and the unemployment rate ticked up to 4.2%. Ahead of the decision, traders on Kalshi priced in an 84% chance that the central bank will raise rates again before the end of 2026, with markets looking toward the Dec 9 meeting.