US Fed holds interest rates steady despite ‘too high’ inflation

On Wednesday, the US Federal Reserve held interest rates steady at 3.75 to 4.00 percent, despite Chairman Kevin Warsh's acknowledgment that inflation remained "too high." The 12-member Federal Open Market Committee voted 10-2 to maintain the target range, citing the need for more data to combat inflation. Two members, Governor Lisa Cook and Cleveland Fed President Beth Hammack, dissented, demanding an immediate quarter-point rate hike.

Energy prices have surged recently, with energy and related prices moving higher again in recent weeks. Warsh stated that the FOMC needs more information to determine the appropriate policy stance to ensure a timely return of inflation to the two-percent goal. The central bank is scheduled to meet again in early December, six days before the crucial US midterm elections.

Warsh emphasized that politics played no part in the decision, stressing the Fed's independence. US Treasury Secretary Scott Bessent expressed confidence in Warsh, noting that the economy is expanding at a strong pace. The Fed will reduce the number of times it sets interest rates in the next two years, meeting eight times a year in 2027 and 2028 but only seven times next year and six times the year after.