The Federal Reserve left its benchmark interest-rate range at 3.75% to 4% on October 28, keeping borrowing costs unchanged for a sixth meeting this year as inflation continued to run above the central bank’s 2% target.
The decision followed a quarter-percentage-point increase at the Fed’s September meeting, the first rate increase in more than three years. Federal Reserve Chair Kevin Warsh said policymakers wanted more information before deciding their next move, while describing the labor market as relatively stable and economic activity as continuing to expand at a strong pace.
Two officials favored another increase
The vote was not unanimous. Fed governor Lisa Cook and Cleveland Fed president Beth Hammack preferred a quarter-percentage-point increase at the October meeting. Cook’s dissent came as President Donald Trump again sought to remove her from the Fed’s board, after the Supreme Court blocked an earlier effort to fire her during the summer, according to the report.
“The Fed can afford to wait — for now,” CoStar’s chief U.S. economist Christine Cooper said via email.
Cooper said Warsh had indicated that financial conditions had tightened for some households and businesses since the September increase, leaving the committee seeking additional data before raising rates again. The decision came six days before the midterm elections, but Warsh said political considerations did not affect the Fed’s deliberations.
Inflation remains the central constraint
Consumer prices increased 3.7% in September from a year earlier, up from 3.4% in August. Gasoline prices rose 9.1% during the month and accounted for more than half of the monthly increase in consumer prices. The figures point to continuing price pressure even as employment growth has slowed.
Employers added 29,000 jobs in September, while the unemployment rate edged up to 4.2%. The Fed characterized unemployment as having “changed little,” a description that reflects a labor market that has cooled without showing a sharp deterioration.
Rate decision comes amid political and global pressure
The Fed’s latest action leaves its policy rate at an elevated level while the effects of the September increase continue to work through the economy. The Bank of Canada took a different step on October 28, raising its benchmark rate by a quarter percentage point to 2.5%, its first increase in three years.
- US policy rate: 3.75% to 4%
- September consumer-price increase: 3.7% year over year
- September unemployment rate: 4.2%
The Fed’s decision preserves the current level of financing costs while officials assess whether persistent inflation warrants another increase. The two dissents show that some policymakers favored immediate action, but the majority chose to wait for further evidence on prices, employment and economic activity.
