The Newshound

US Federal Reserve holds rates days before the midterms despite inflation hitting 3.7% as two officials demand a hike

Kevin Warsh, whose two dissenting colleagues pushed for an immediate quarter-point rate rise that the committee's 10-2 majority rejected.
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.
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.

Fed Chair Kevin Warsh announced the hold after a 10-2 vote, with governors Lisa Cook and Beth Hammack both dissenting in favour of an immediate quarter-point rise. Inflation climbed from 3.4% in August to 3.7% in September — a four-month high and nearly double the Fed's 2% target — driven largely by soaring oil prices after Iran war disruption closed the Strait of Hormuz. The decision comes just days before Tuesday's midterm elections, which will determine control of Congress.

Warsh said he was 'unwilling and unable' to describe financial conditions as 'tight', though he acknowledged they were moving in the right direction.

Investors are now pricing in a December rate hike, with economist Heather Long of Navy Federal Credit Union warning borrowing costs will stay 'really high for the foreseeable future'.

Warsh also announced the Fed will cut its annual rate-setting meetings from eight to seven next year and to six in 2028.

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