Fed holds interest rates steady despite surging inflation

Skip to Content News Archives Economy Defence Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Defence Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Defence Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials This advertisement has not loaded yet, but your article continues below.HomeNewsEconomyFed holds interest rates steady despite surging inflationCommittee voted 10-2 to keep rates at a target range between 3.75 to 4%Author of the article:Last updated 13 minutes ago U.S. Federal Reserve chair Kevin Warsh speaks during a press conference following the Federal Open Market Committee's interest-rate decision in Washington, D.C., on Oct. 28, 2026. Photo by SAUL LOEB /AFP via Getty ImagesThe United States Federal Reserve on Wednesday held interest rates steady, in line with market expectations, days ahead of crucial midterm elections where surging inflation has been a key issue.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountThe 12-member Federal Open Market Committee (FOMC) voted 10-2 to hold rates at a target range between 3.75 to 4.00 per cent, citing the need for more data in the fight against inflation, after having hiked for the first time in three years at its previous meeting in September.This advertisement has not loaded yet, but your article continues below.“The accumulation of more information will help the Committee determine the policy stance appropriate to ensure a timely return of inflation to the Committee’s two per cent goal,” the Fed said in a statement announcing its decision.SUBSCRIBER EXCLUSIVE: FP West: Energy Insider brings you behind the oilpatch’s closed doors with exclusive insights from insiders every Wednesday morning.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of FP West: Energy Insider will soon be in your inbox.We encountered an issue signing you up. Please try againTwo members of the committee, Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented, calling instead for an immediate 0.25-percentage-point rate hike.The central bank has missed its long-term two-per cent target for inflation for more than five years, with households and businesses battered by sustained price increases.U.S. President Donald Trump’s war on Iran, launched in late February, has sent energy prices skyrocketing and fuelled domestic inflation, alongside his wide-ranging tariff policies.Prices have also been driven by an investment boom in artificial intelligence technology and the build-out of huge data centres to support it.The decision comes six days ahead of the Nov. 3 midterm elections, in which the Democratic Party is seeking to wrest control of both houses of Congress from Trump’s Republicans.This advertisement has not loaded yet, but your article continues below.Trump’s handling of the economy has been a key issue throughout the campaign, with working-class households across the country struggling to make ends meet despite largely stable overall economic growth.U.S. consumer inflation came in hotter than expected in September, clocking in at 3.7 per cent, edging back towards a three-year high established in May.Still, key policymakers at the Fed — including chair Kevin Warsh — have signalled that they did not see an urgency to raise rates again immediately.Speaking in Bangkok earlier this month, Warsh said that U.S. economic conditions had “broadly conformed” to policymakers’ expectations, fuelling speculation that the Fed could pause at the October meeting.On Wednesday, the Fed said economic activity in the United States was expanding at a “strong” pace, upgrading its language from the FOMC meeting six weeks prior.‘Don’t understand the logic’Wendy Edelberg, senior fellow at the Brookings Institution, told AFP before the meeting that a decision to hold after raising rates in September was potentially contradictory, given the labour market — the Fed’s other mandate — has been largely stable.This advertisement has not loaded yet.This advertisement has not loaded yet, but your article continues below.“In terms of the economics of it, I don’t totally understand the logic,” she said.“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.”The Fed has a dual mandate to maintain maximum employment while keeping inflation to its long-term target.It achieves this goal largely using one tool: the economy’s key interest rate. Raising rates tends to cool inflation but can also dampen economic activity; lowering them can spur economic activity but also fuel inflation.The U.S. unemployment rate has been largely stable around 4.2 per cent over the last year, with job growth mostly in positive territory — albeit driven by a few sectors.Other advanced economies have also been grappling with high inflation, and on Wednesday Canada’s central bank raised its key rate to 2.5 per cent, its first hike since July 2023.Attacks on FedLoretta Mester, former head of the Cleveland Fed, took part in FOMC meetings during her tenure and insisted that the committee did not “take into account any kind of political issues” when it debated monetary policy.This advertisement has not loaded yet, but your article continues below.Still, Trump has loomed large over the Fed since he returned to power last year.In his second term, he has led an unprecedented assault on the Fed’s independence, pursuing criminal charges against Warsh’s predecessor, Jerome Powell, and attempting to fire Cook as he demanded lower interest rates.While the probe against Powell was dropped to smooth the way for Warsh’s Senate confirmation, the White House has recently renewed its drive to fire Cook — despite a Supreme Court decision that batted back an earlier attempt.“I don’t think it’s going to stop because I think it’s in the nature of this administration to continue those attacks,” said Mester.This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. 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