Fed hits pause on interest rates

Federal Reserve officials held interest rates steady Wednesday despite stubborn inflation.

The central bank’s Federal Open Market Committee (FOMC) voted 10-2 to keep the benchmark federal funds rate range at 3.75 percent to 4 percent .

“The committee believes that the accumulation of more information will help it determine the policy stance appropriate to ensure a timely return of inflation to the 2 percent goal,” Fed Chair Kevin Warsh told reporters, reiterating the FOMC’s statement.

Fed board of governors member Lisa Cook and Federal Reserve Bank of Cleveland’s president Beth Hammack dissented in favor of a quarter-point increase. Hammack also backed a rate hike in late July, joining two of her colleagues in the minority when the central bank kept rates steady.

Wednesday’s decision came six weeks after officials raised rates by a quarter point, the first hike in more than three years. Inflation has risen this year amid the Iran war, creating a difficult set of circumstances for President Trump and the GOP this midterm cycle.

Warsh said Wednesday he has “started to see some changes” in financial and credit conditions since the Fed raised rates in September.

“They have tightened for some businesses and households , much as we would expect,” he added. “Market participants are becoming somewhat more discerning in their capital allocations.”

But the Fed chair noted he was “unwilling and unable” to call financial conditions “tight,” while arguing they are headed “in the direction of achieving a longer or durable period of economic growth and price stability.”

Traders were overwhelming anticipating a hold, pricing in a 92.8 percent chance of the FOMC keeping rates steady as Wednesday afternoon, according to the CME FedWatch tool.

Welcome to The Hill’s Business & Economy newsletter , I’m Max Rego — covering the intersection of Wall Street and Pennsylvania Avenue.

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