By Basant El-Faramawy
The Federal Reserve voted Wednesday to keep interest rates unchanged, delivering its final monetary policy decision before the November midterm elections. The decision came despite inflation accelerating from a 3.4% annual rate in August to 3.7% in September, well above the central bank’s 2% target.
Inflation Driven by Energy Costs
A major driver of the price surge is the soaring cost of gasoline, diesel and crude oil, which has begun to spread across the broader economy. The Fed’s preferred inflation gauge, the personal consumption expenditures price index, is expected to register 3.7% when released Thursday.
Meeting Schedule Reduced
Chairman Kevin Warsh announced that the central bank will cut the number of rate-setting meetings from eight to seven next year and reduce them by two in 2028, saying the change would improve the quality of decisions.
Dissenting Votes
The vote was not unanimous. Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented in favor of a rate increase, marking Cook’s first dissent. President Donald Trump has sought to remove Cook from her post.
Political Context
Warsh said the midterm elections and politics “played no role in the decision.” He defended his colleagues against Trump’s claims that Fed officials are hostile to the administration, describing the deliberations as a “serious, sober discussion.”
Outlook for December
The Fed acknowledged that inflation remains elevated and said more data is needed before raising rates. Economists said the statement sets the stage for a possible rate hike at the December meeting.
