Fed holds rates at 3.75%-4% as Warsh warns inflation 'too high'

· Economy · United States

The Federal Reserve left its benchmark rate unchanged at 3.75% to 4% on Wednesday, its last decision before the US midterm elections, after a quarter-point hike in September. Two of the 12 voting members dissented, both preferring a quarter-point increase. Chair Kevin Warsh said inflation remains 'too high' and that the central bank will 'deliver price stability', while saying monetary 'medicine' is starting to work and that politics played no role in the pause. He also said the Fed will hold fewer rate-setting meetings in future years. Analysts including Richard Clarida expect a hike in December; Treasury Secretary Scott Bessent said a further hike would 'not necessarily' be a mistake and played down concerns about AI financing.

Why it matters：The pause keeps US borrowing costs near multi-decade highs just before an election in which living costs dominate, and signals the Fed may tighten again if inflation does not cool.

Key points

  • The decision had two dissents, both favoring a quarter-point increase.
  • Warsh said the Fed would host fewer policy meetings in future years.
  • Oil and energy costs are cited as a main driver of persistent inflation.

Sources (original reporting)

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