Fed leaves interest rates unchanged despite inflation in the US

SaveSharefacebookxwhatsapp-strokecopylinkThe decision by the US Federal Reserve, the central bank in the United States, comes less than a week before the country's midterm elections [File: Ken Cedeno/Reuters]By Al Jazeera StaffPublished On 28 Oct 202628 Oct 2026The United States Federal Reserve is set to hold interest rates steady in its final monetary policy decision before the US midterm elections.The central bank will maintain rates at 3.75-4 percent, following a 10-2 vote, in line with expectations.Recommended Stories list of 4 itemslist 1 of 4US inflation rises before midterm elections, fuelling rate hike fearslist 2 of 4How Iran messaging highlights cost of war ahead of US midterm electionslist 3 of 4US consumer sentiment hits a near-record low before midterm electionslist 4 of 4Hackers target US campaign finance system days before midterm electionsend of listCME FedWatch, which tracks the likelihood of monetary policy decisions, indicated that there was more than a 90 percent chance rates would remain unchanged.“Economic activity is expanding at a strong pace,” the Fed said in its press release announcing the decision on Wednesday. “While uncertainty remains elevated owing, in part, to geopolitical developments, domestic spending has been resilient. Productivity growth is strong, and capital investment is robust. Job gains have kept pace with the workforce, and the unemployment rate has changed little.”The Fed noted how inflation continues to rise.It also added, “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 2 percent goal.”The most recent Consumer Price Index (CPI) report showed the annual inflation rate increasing to 3.7 percent in September, up from 3.4 percent in August, with energy prices largely accounting for the monthly surge.There were signs earlier this month that the central bank would maintain benchmark interest rates, with the Fed’s chair for supervision, Michelle Bowman, advocating a “wait and see” approach.“I don’t feel any urgency for taking further action at this point,” she said at this month’s International Monetary Fund-World Bank meetings in Bangkok, Thailand. “We really need to take some time and understand how things will evolve.”The decision comes before Thursday’s release of the Personal Consumption Expenditures (PCE) Price Index report, which is used by the central bank to assess inflation and inform its decisions.Today’s Fed announcement follows an interest-rate hike rise last month, amid surging inflation – the first increase by the central bank since July 2023. The move drew criticism from US President Donald Trump, who has repeatedly pressed the Fed to cut rates since taking office. At the time, he wrote on Truth Social that “interest rates in the United States should be 1% or less.”The Fed’s next monetary policy meeting is scheduled for December 8-9, when it will give its final rate decision of the year.Current forecasts point to a quarter-point interest rate increase.