US Fed holds rates at 3.75–4% as two officials vote for a hike
The Federal Reserve left its benchmark rate unchanged on 28 October, but two members of the committee wanted a quarter-point increase with inflation still elevated.
The Global Sun Desk ·
The US Federal Reserve kept its benchmark interest rate in a range of 3.75 to 4 per cent on Wednesday, 28 October (US time), with two members of its rate-setting committee voting for a quarter-point increase. The 10–2 decision came after the Fed raised rates in September, which NBC News described as its first increase since 2023.
The Fed's statement names the two who voted against as Beth Hammack, who heads the Cleveland Fed, and Governor Lisa Cook. NBC News reported that it was Cook's first dissent, and noted that she is the governor President Donald Trump is trying to fire.
What the Fed said
The statement said inflation "remains elevated". It described economic activity as expanding at a strong pace, with resilient domestic spending, and said job gains had kept pace with workforce growth while the unemployment rate had changed little. It added that uncertainty remains elevated, partly because of geopolitical developments.
Inflation in the United States rose to an annual rate of 3.7 per cent in September from 3.4 per cent in August, NBC News reported. Higher petrol, diesel and crude oil prices are a major driver, and the broadcaster linked the energy price rise to the war with Iran. The Fed's preferred gauge, the PCE price index, was due out on Thursday, with economists expecting it to reach 3.7 per cent.
Warsh's remarks and the road ahead
Fed Chair Kevin Warsh told reporters that inflation was "too high" and that energy and related prices "have moved higher again in recent weeks". He said politics, including the coming midterm elections, "played no role" in the decision, and described the disagreement inside the committee as "a heck of a family fight".
Warsh also said the Fed would hold seven rate-setting meetings next year instead of eight, a change he said would improve the quality of its decisions.
NBC News said the statement, and inflation running well above the Fed's 2 per cent goal, leave open the possibility of another rise at the December meeting. Economists at Morgan Stanley said the Fed "might not be done tightening", depending on incoming data.
Fed decisions are followed closely in India because they influence the dollar and global capital flows, which in turn affect the rupee. The Reserve Bank of India raised its own repo rate to 5.50 per cent on 7 October, and its next policy decision is due in early December.