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The Fed’s rate-setting body, voted 10-2 to maintain its benchmark rate in a target range of 3.75% to 4%.
The US Federal Reserve building during a partial government shutdown in Washington. (File image)
The US Federal Reserve kept its key interest rate unchanged on Wednesday, despite persistent inflation, offering little indication of what it may do next as policymakers seek to bring price rises under control without slowing economic growth.
The Federal Open Market Committee (FOMC), the Fed’s rate-setting body, voted 10-2 to maintain its benchmark rate in a target range of 3.75% to 4%. The decision followed a rate increase in September, the first in three years.
“Inflation remains elevated,” the Fed said in its policy statement, adding that gathering more information would help officials decide the appropriate course of action.
Fed Seeks More Data Before Next Rate Decision
Fed Chair Kevin Warsh said inflation remained a concern as households faced higher living costs, including rising fuel prices.
“Inflation is too high,” Warsh told reporters after the meeting.
The central bank said economic activity was expanding at a “strong” pace, but it offered little guidance on whether rates would rise again or remain unchanged at its next meeting.
Two policymakers, Governor Lisa Cook and Cleveland Fed President Beth Hammack, opposed the decision to hold rates steady. Both favoured an immediate increase of 0.25 percentage points.
Inflation Pressures Extend Beyond US
The Fed has struggled to bring inflation back to its long-term target of 2%. US consumer inflation reached 3.7% in September, moving closer to a three-year high recorded in May.
Higher energy costs and import tariffs have added to price pressures, while investment in artificial intelligence infrastructure has also contributed to demand in parts of the economy.
The decision matters beyond the US, as changes in American interest rates can influence global borrowing costs, currency movements, investment flows and trade. Countries with significant dollar-denominated debt can be particularly sensitive to shifts in US monetary policy.
Other major economies are also dealing with inflationary pressures. Canada, for instance, raised its key interest rate to 2.5% on Wednesday, marking its first increase since July 2023.
Fed Faces Economic And Political Pressures
The Fed must balance its two main responsibilities: keeping inflation under control and supporting maximum employment.
Higher rates can curb price rises by making borrowing more expensive, but they can also weaken spending and investment.
The central bank has also faced pressure from President Donald Trump, who has repeatedly called for lower borrowing costs.
(With inputs from agencies)
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Ask News18The US Federal Reserve maintained its key interest rate unchanged, keeping the benchmark rate in a target range of 3.75% to 4% at 3.9%.
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October 29, 2026, 00:09 IST
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