Fed Holds Interest Rates Steady as Inflation Pressures Persist

Ahmed Kamel – Egypt Daily News

World

The U.S. Federal Reserve kept interest rates unchanged on Wednesday, choosing to wait for additional economic data even as inflation remained well above its long-term target. The decision came six days before the November 3 midterm elections, in which the economy and the cost of living have been major campaign issues.

JUST IN: Fed Chair Kevin Warsh says "inflation is too high." pic.twitter.com/MxNB6bTxO6

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October 28, 2026

The 12-member Federal Open Market Committee voted 10-2 to maintain its benchmark rate in a target range of 3.75 to 4.00 percent. The Fed said more information would help it determine the appropriate policy stance to return inflation to its 2 percent goal in a timely way.

The decision followed the committee’s first rate increase in three years at its previous meeting in September. Two members dissented this time: Fed Governor Lisa Cook and Cleveland Fed President Beth Hammack, who favored an immediate increase of 0.25 percentage point.

BREAKING: The Federal Reserve holds interest rates steady at 3.75% to 4%, just six days before the midterm elections, as inflation continues to weigh on the U.S. economy.

Fed policymakers voted 10-2 to keep rates unchanged after raising them by 25 basis points in September, the… pic.twitter.com/IkkSFacaTM

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The split vote underscored the challenge facing policymakers. Inflation has remained above the Fed’s target for more than five years, while further rate increases could weigh on economic activity and employment. The central bank is tasked with both maintaining maximum employment and keeping inflation under control, goals that can pull policy in different directions.

The Fed said U.S. economic activity was expanding at a “strong” pace, upgrading its description from the previous meeting six weeks earlier. At the same time, consumer prices continued to rise faster than expected. Inflation reached 3.7 percent in September, moving back toward a three-year high recorded in May.

Several forces have contributed to price pressures. Energy costs have surged amid President Donald Trump’s war on Iran, which began in late February, while Trump’s broad tariff policies have also added to concerns about inflation. An investment boom in artificial intelligence technology and the construction of large data centers to support it have contributed to demand and costs as well.

The persistence of inflation has left households and businesses coping with sustained price increases. Although overall economic growth has remained relatively stable, many working-class households have struggled to make ends meet. The issue has featured prominently in the campaign ahead of the midterm elections, with Democrats seeking to take control of both chambers of Congress from Trump’s Republican Party.

The Fed’s decision not to raise rates immediately drew questions from some economists. Wendy Edelberg, a senior fellow at the Brookings Institution, said before the meeting that holding rates after September’s increase could appear inconsistent, particularly because the labor market had remained broadly stable.

“If there was a reason to raise interest rates at the last meeting, I think that there’s just as compelling of an economic reason to raise interest rates at this meeting,” Edelberg said.

The U.S. unemployment rate has remained around 4.2 percent over the past year, and job growth has generally stayed positive, though employment gains have been concentrated in a limited number of sectors. Policymakers must weigh those labor-market conditions against the risk that inflation could remain elevated or accelerate further.

The Fed’s primary policy instrument is its benchmark interest rate. Raising rates can cool demand and help restrain inflation, but it can also slow economic activity. Lowering rates can support growth, while potentially adding to price pressures. The committee’s decision to hold reflects its stated desire to assess further information before changing course again.

Central bankers elsewhere are also confronting inflation. On Wednesday, Canada’s central bank raised its key rate to 2.5 percent, its first increase since July 2023.

The Fed’s deliberations have also taken place amid sustained pressure from the White House. Since returning to power, Trump has sought lower interest rates and challenged the central bank’s independence. His administration pursued criminal charges against former Fed chair Jay Powell and attempted to remove Governor Cook. The probe involving Powell was dropped as the way was cleared for Warsh’s Senate confirmation, while the White House has renewed its effort to fire Cook despite a Supreme Court decision blocking an earlier attempt.

Former Cleveland Fed head Loretta Mester, who participated in FOMC meetings during her tenure, said the committee did not take political considerations into account when setting monetary policy. She warned, however, that the administration’s attacks on the central bank were unlikely to stop.

The Fed’s Wednesday statement did not signal an immediate next move. Instead, the committee emphasized the need for more information as it assesses inflation, employment and economic growth. With prices still rising faster than the central bank’s target and political scrutiny intensifying, the decision leaves policymakers balancing competing risks in the weeks ahead.

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