By Basant El-Faramawy
The Federal Reserve held its benchmark interest rate steady on Wednesday, maintaining the target range between 3.75% and 4% as policymakers assess persistent inflation ahead of the November midterm elections.
Inflation remains above target
Consumer prices rose 3.7% in September compared with a year earlier, well above the Fed’s 2% goal, driven partly by higher fuel costs linked to Middle East unrest. The central bank raised rates by a quarter point last month, its first increase in three years, but the full effect of that move typically takes several months to materialize.
Fed Chair signals patience
Chair Kevin Warsh told a Washington press conference that officials want more data before deciding on further tightening. “The committee believes the accumulation of more information will help it determine the policy stance appropriate to ensure a timely return of inflation to the 2% goal,” Warsh said. He expressed optimism about economic growth, citing resilient domestic spending despite geopolitical uncertainty.
Labor market shows signs of cooling
Employers added only 29,000 jobs in September, a sharp slowdown from 162,000 in August and below economist forecasts. The weaker report complicates the Fed’s calculus, as a softening labor market could reduce the need for aggressive rate hikes.
Fewer rate decisions planned
Warsh announced the Fed will hold seven policy meetings in 2027, down from eight this year, and six in 2028. He said the change allows more time for strategic deliberation while maintaining regular policy reviews.
Political backdrop and market expectations
The decision comes as President Donald Trump renews criticism of the Fed’s rate policy, urging cuts on social media. Market pricing shows nearly an 80% chance of a quarter-point increase at the December meeting, according to the CME FedWatch Tool. Deutsche Bank analysts suggested the Fed may prefer to avoid a rate hike so close to the midterms, though they do not see the election as a primary driver.
