By Ahmed Abdelsalam
The US Federal Reserve is expected to leave interest rates unchanged on Wednesday at its last rate-setting meeting before the midterm elections, keeping rates at one of the highest pre-election levels in over two decades.
Last month, the Fed raised rates for the first time since 2023, citing persistent inflation above its 2% target. Annualized inflation has remained above 3% for most of the year, rising to 3.7% in September from 3.4% in August. The previous hike drew criticism from Donald Trump, who argued rates should be 1% or lower.
Fed officials have signaled a pause to assess economic data ahead of the elections. Governor Christopher Waller said rate hikes need not be consecutive but should occur within an acceptable timeframe. NYU economics professor Nicholas Economides noted the Fed is unlikely to take radical action so close to the vote, as the economy would not adjust in time.
Inflation has been driven partly by Middle East conflict involving Iran, with oil prices surging after the Strait of Hormuz closure. Oil briefly topped $117 a barrel, the highest in six months. The cost of living is a top voter concern. Economides warned that rate hikes cannot fully address supply-driven inflation and may slow the economy unnecessarily. Fed Chair Kevin Warsh, however, argued the central bank must prevent broader price pressures from taking hold.
