The Federal Reserve held interest rates steady Wednesday, even as inflation data has been worsening – but the central bank is largely expected to issue a quarter-point hike in December.
It approved the hold in a 10-2 vote, as Fed Governors Lisa Cook and Beth Hammack dissented in favor of raising interest rates by a quarter point, instead.
Investors and economists will be closely watching Fed Chair Kevin Warsh’s press conference Wednesday afternoon for any signs that officials are revving up to raise rates a second time this year, after issuing a hike in September for the first time since 2023.
Though most officials at the September meeting said another rate hike would be needed this year to combat inflation, traders anticipated the Fed would hold off in October over fears of appearing politicized less than a week away from the midterm elections.
Affordability has taken center stage ahead of the midterms, with Democrats pulling ahead in some early polls, as Americans grow frustrated with high prices at gas pumps and grocery stores amid the Iran war.
Since the Fed’s last meeting, economic data has only shown more cause for concern.
The Consumer Price Index rose 3.7% over the past 12 months through September, while the Producer Price Index jumped a whopping 6.3% over the same period – a sign that costs could continue to climb through the holiday season.
Meanwhile, the war with Iran has cost the US military at least $47.1 billion as of mid-October, according to a new estimate from US Central Command reported by several news outlets.
Another rate hike could incite blowback from President Trump, who has argued the Fed should lower interest rates.
The commander-in-chief repeatedly bashed Warsh’s predecessor, Jerome Powell, for not slashing rates quick enough.
Another rate hike could also raise borrowing costs on mortgages, auto loans and credit cards.
Interest rates are currently in the 3.75% to 4% range.
This is a developing story. Please check back for updates.
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