US Federal Reserve holds interest rates days before the midterms despite inflation climbing to a four-month high of 3.7%
Kevin Warsh, whose two dissenting colleagues pushed for an immediate quarter-point rate rise that the committee's 10-2 majority rejected.A data graphic showing US inflation and interest rates, as oil briefly trading above $117 a barrel this week drives fuel costs that account for much of September's price surge.
The Federal Open Market Committee voted 10-2 on Wednesday to keep the federal funds rate in the 3.75%-4% range, with two dissenters — Fed Governor Lisa Cook and Cleveland Fed President Beth Hammack — pushing for an immediate quarter-point hike. Fed Chair Kevin Warsh said the committee needs "more information" before acting again, even as annual inflation surged from 3.4% in August to 3.7% in September, its highest in four months and nearly double the Fed's 2% target. Iran war fuel costs are driving much of the acceleration, with oil briefly trading above $117 a barrel this week. Investors are now pricing in a December rate hike that could push already-painful credit card rates — averaging 23.96% — even higher heading into the holiday season.
'Inflation is still the No. 1 problem in the US economy,' said Heather Long, chief economist at Navy Federal Credit Union, warning borrowing costs will stay high 'for the foreseeable future.'
Thirty-year fixed mortgage rates stand at 7.32%, up sharply from 6.19% a year ago, squeezing homebuyers alongside consumers already battling the Iran war price shock.
