The Federal Reserve held its benchmark rate steady at a target range of 3.75% to 4% on Wednesday, even as officials acknowledged that inflation remains elevated. Two members of the Fed’s rate-setting committee dissented in favor of a hike, according to CBS News US.
The decision leaves the federal funds rate unchanged after the Fed raised rates last month for the first time in three years, according to CBS News US. Ten members of the Federal Open Market Committee voted to hold rates steady. Fed Governor Lisa Cook and Cleveland Fed President Beth Hammack voted to raise rates by 0.25 percentage points, according to CBS News US.
The Fed’s statement said economic activity is growing at a "strong pace" while acknowledging that inflation remains elevated, according to CBS News US. The Consumer Price Index rose at a 3.7% annual rate last month, and core inflation rose 2.6% from a year ago. Both figures were above economists’ expectations, CBS News US reported.
Chair Kevin Warsh said inflation remains "too high" and that it is the Fed’s responsibility to bring it down, according to CBS News US. Warsh said the decision was not political, saying he heard no talk of politics in two days of meetings, according to PBS NewsHour.
The Iran war has kept global energy costs elevated, making it harder to bring down prices in the U.S., according to CBS News US. President Trump has long urged the Fed to ease borrowing costs, and the decision came less than a week before the midterm elections, CBS News US reported. The sources reviewed for this article contain no response from Trump or the White House to the decision.
Accounts differ on how markets reacted. PBS NewsHour reports that the Dow Jones industrial average added nearly 100 points, the Nasdaq rose about a quarter of 1%, and the S&P 500 ended positive. CBS News US reports that the three major indexes remained essentially flat after the announcement. No second source confirms the index moves.
Accounts also differ on whether Warsh signaled further hikes. A Japan Times headline and short excerpt say Warsh telegraphed more hikes without saying so and signaled the Fed’s job is not done. CBS News US reports that Warsh declined to say whether officials would hike in December, citing his reluctance to telegraph policy views. The Japan Times account could not be verified beyond that excerpt.
Starting in 2027, one of the Fed’s eight yearly meetings will be reserved for policy strategy discussion, with no vote on rates or policy statement, Warsh said, according to CBS News US.
The next rate decision is at the Dec. 8-9 meeting, where economists at Oxford Economics expect a hike.
Sources
This article was written with AI assistance from the published reporting listed above. It is part of the World Brief daily news podcast.