The Federal Reserve held interest rates steady on Wednesday in the committee’s last move before the midterm elections, which have been dominated by affordability concerns.
“While uncertainty remains elevated owing, in part, to geopolitical developments, domestic spending has been resilient,” the Federal Open Market Committee said in a statement.
The committee voted 10-2 to maintain rates at 3.75% to 4%. The members cited strong productivity growth and capital investment, as well as job gains, in their decision, their second to last of the year. The two dissenting committee members, Lisa Cook and Beth Hammack, wanted to raise interest rates a quarter percentage point.
In September, the Fed raised rates a quarter percentage point to tamp down on inflation — its first rate hike since 2023. The higher target range, which influences rates for consumer and business loans, sent average mortgage rates climbing to 7.32% for a 30-year loan, according to Freddie Mac. Mortgage rates started the year at 6.15%.
Trending
Americans are facing higher prices across the board. The Fed’s primary metric for annual inflation increased 3.4% in August and increased 0.3% from the month prior, according to the Bureau of Economic Analysis. The Fed has a 2% target inflation rate.
Republicans have struggled to buoy Americans’ spirits about the cost of living. Many Trump administration officials and lawmakers have said energy prices will come down when the Iran war ends, but economists say high energy costs have tainted the supply chain and made products more expensive for months to come.
On the campaign trail, high gas, food and housing prices have become central issues and Democrats’ primary line of attack as they attempt to retake Congress.
President Donald Trump and his party have insisted the Fed should lower rates to stimulate economic growth and bring prices down, though Fed Chair Kevin Warsh has said the central bank will maintain its independence. Lowering rates makes borrowing cheaper, encouraging new businesses to open and existing ones to expand their operations at the risk of overheating the economy.
Members of the rate-setting committee, however, indicated in their quarterly economic projections last month that another rate hike could be on the horizon. Most committee members estimated interest rates should top 4% this year and into 2027 to fulfill the Fed’s dual mandate of keeping prices stable and promoting employment.
The final interest rate meeting of the year will take place Dec. 8 and 9.
Author
