Fed holds rates steady despite lack of progress on inflation

The Federal Reserve held interest rates steady Wednesday, despite no recent progress on getting inflation back down to the central bank's 2% target.

Officials voted 10-2 to keep rates at the previous range of 3.75% to 4%. That level was reached in September after policymakers decided unanimously to raise borrowing costs for the first time since 2023.

Lisa D. Cook, a Fed governor whom President Donald Trump has tried to fire, issued her first-ever dissent on the Fed's monetary policy settings, voting in favor of a quarter-point increase. She was joined by Beth M. Hammack, president of the Federal Reserve Bank of Cleveland, who has dissented a number of times this year.

In a statement accompanying the rate decision, the Fed conveyed that it still had more work to do to quell inflation, which it described as "elevated."

"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," it said. That message aligned with comments from top policymakers in the lead-up to October's meeting.

The central bank gathered just days before midterm elections that will decide whether Republicans will retain control of Congress. Affordability issues are front and center for voters after nearly six years in which inflation has overshot the Fed's target.

Kevin Warsh, who took over as chair of the central bank in May, told reporters that politics did not factor into the Fed's decision Wednesday. Instead, he suggested that the Fed had the flexibility to wait and accumulate more information before its next meeting in December.

U.S. government borrowing costs have risen sharply in recent months, making not only mortgages and other consumer loans more expensive, but also financing for companies. Certain artificial intelligence companies, which have issued a significant amount of debt to fund expansion plans, appear particularly exposed.

On Wednesday, the short-dated, two-year Treasury yield fell to 4.72% while the 10-year Treasury yield rose before settling around 5.02%. The move in the 10-year was driven by a rise in the break-even inflation rate, which is a market measure of investors' inflation expectations.

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