As widely anticipated, the US Federal Reserve left interest rates unchanged on Wednesday, October 28, giving policymakers more time to assess the impact of the previous rate hike on the economy and financial conditions, even as inflation remained above the central bank’s target.
The Federal Reserve voted 10-2 to keep interest rates unchanged at 3.75%–4%, with two policymakers dissenting in favour of a 25-basis-point hike. Fed Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented from the policy decision, favouring a 25-basis-point interest rate hike.
“Inflation remains elevated,” the Fed said in a statement released after its two-day policy meeting. Holding off on an increase will allow “the accumulation of more information” that will help determine what policy the Fed should pursue “to ensure a timely return of inflation” to the central bank’s 2% inflation target, the statement said.
The latest decision also comes less than a week before the US midterm elections, with the cost of living and affordability among the key concerns for voters.
The policymakers need more information to assess the economic outlook and determine the future course of monetary policy. Persistent inflationary pressures, alongside signs of moderation in the labour market, remain key factors shaping the central bank’s policy outlook.