Fed holds its key rate steady as two officials, including Lisa Cook, vote for a hike

WASHINGTON (Oct. 28) — The Federal Reserve left its key interest rate unchanged Wednesday, less than a week before the midterm elections, even as it said inflation "remains elevated."

The Federal Open Market Committee voted 10-2 to keep the federal funds rate in a range of 3.75% to 4%, according to the Fed's statement. The rate has been at that level since the central bank raised it by a quarter point in September, CNBC reported, the Fed's first increase in three years, according to the AP.

Governor Lisa Cook and Cleveland Fed President Beth Hammack voted against the decision, each preferring a quarter-point increase, the statement said. CNBC reported it was Cook's first dissent since she joined the Fed in 2022. President Donald Trump has tried to remove Cook over allegations about information on her home loan applications; the Supreme Court stopped that effort, and the administration has restarted it, with a hearing scheduled for early November, CNBC reported.

In its statement, the committee said economic activity is "expanding at a strong pace" and that "the accumulation of more information" will help it decide on the policy needed to return inflation to its 2% goal. Fed Chair Kevin Warsh told reporters that third-quarter growth appeared likely to be running above 3%, according to the Fed's transcript of his opening statement.

Warsh denied that politics affected the decision, the AP reported. The decision was widely expected: markets had priced in less than a 10% chance of a hike, and futures pricing points to a strong possibility of an increase at the Fed's December meeting, CNBC reported.