Federal Reserve keeps interest rates unchanged

As expected, the Federal Open Market Committee kept interest rates unchanged Wednesday in its last meeting before the U.S. midterm elections.

The consumer price index, the Federal Reserve's preferred measure of inflation, increased in September to an annual rate of 3.7%, a four-month high and well above its 2% target. Last month the central bank hiked interest rates by 25 basis points to the 3.75% to 4% target range.

That was the first rate hike in three years. The decision Wednesday maintains that target range.

In a statement after the meeting, the Fed said it needs more information before hiking rates again.

"Inflation remains elevated," the statement said. "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% goal."

Two committee members -- Governor Lisa Cook and Cleveland Fed President Beth Hammack -- dissented from the decision. Both were in favor of increasing rates by a quarter percentage point.

Despite the continued economic pressures on consumers, including elevated gas prices due to the Iran war's strain on the global fuel supply, investors had given a less than 10% chance that the Federal Reserve would increase interest rates Wednesday.

"Inflation is still the No. 1 problem in the U.S. economy, and there are a lot of signs it is getting more broad-based," said Heather Long, chief economist at Navy Federal Credit Union. "For consumers, it means really high borrowing costs for the foreseeable future."

Next week's midterm elections also factor into the central bank's decision, Long said, decreasing the likelihood of a rate hike.

Fed Chairman Kevin Warsh also announced after the meeting Wednesday that the central bank will reduce the number of meetings in which it votes on interest rates from eight to seven next year -- and to six in 2028.

September's inflation reading was not the only sign that the U.S. economy is struggling. New job hires slowed to 29,000 for the month, down from 162,000 in August.

President Donald Trump has long called for the Federal Reserve to lower interest rates, sparring with former Fed chair Jerome Powell with threats of removing him for months.

The president has continued to call for the Federal Reserve to lower interest rates under Warsh, who was appointed by the president in the spring. When the Federal reserve increased interest rates last month, Trump took to social media reiterating his wish for lower rates.

"LOWER THE INTEREST RATES FOR THE UNITED STATES OF AMERICA, AND FAST!" Trump said.