Fed: Rates Held at 4 Percent

The Federal Reserve held interest rates steady on Wednesday.

The central bank kept its benchmark rate in the 3.75 to 4 percent range. A 10-2 vote produced the result, which matched what financial markets expected. This decision stands as the last policy action before the United States midterm elections.

Inflation accelerated earlier this month. The Consumer Price Index showed annual prices rising to 3.7 percent in September. That figure was up from 3.4 percent in August. Energy costs drove most of the monthly increase. The Fed’s statement noted that economic activity is expanding at a strong pace. It also said domestic spending remains resilient and productivity growth is strong. Job gains have kept pace with the workforce, and the unemployment rate has changed little. The statement acknowledged that uncertainty remains elevated due to geopolitical developments. The committee said it needs more information to determine the appropriate policy stance for returning inflation to its 2 percent goal.

Signs of a pause appeared before the announcement. Michelle Bowman, the Fed’s chair for supervision, argued for a wait and see approach at meetings in Bangkok, Thailand. She said she does not feel any urgency for taking further action at this point. Policymakers need time to understand how conditions will evolve. The decision came after a rate increase last month. That move was the Fed’s first hike since July 2023. President Donald Trump criticized the hike. He has repeatedly pressed the Fed to cut rates since taking office. On Truth Social, he wrote that interest rates in the United States should be 1 percent or less.

The CME FedWatch tool tracked the odds of policy moves ahead of the announcement. It put the chance of rates staying put at more than 90 percent. The Fed uses the Personal Consumption Expenditures Price Index to assess inflation. That report is scheduled for release on Thursday. The next policy meeting is set for December 8 and 9. The Fed will announce its final rate decision of the year at that time. Current forecasts point to a quarter-point increase.