Fed holds rates at 3.75–4%, but two officials vote for a hike with inflation at 3.7%

The US Federal Reserve left its benchmark interest rate unchanged at 3.75% to 4% on Wednesday, but the decision was not unanimous. Two members of the Federal Open Market Committee — Governor Lisa D. Cook and Cleveland Fed President Beth M. Hammack — voted against, preferring to raise the rate by a quarter of a percentage point. The vote was 10–2.

It was the fourth meeting chaired by Kevin Warsh. In September the Fed raised rates by 25 basis points, its first increase since July 2023.

What the Fed said

The statement was upbeat on growth. “Economic activity is expanding at a strong pace,” it said. “While uncertainty remains elevated owing, in part, to geopolitical developments, domestic spending has been resilient.” It added that “productivity growth is strong, and capital investment is robust,” and that “job gains have kept pace with the workforce, and the unemployment rate has changed little.” But “inflation remains elevated,” it said. “The Committee will deliver price stability.”

US consumer prices rose 3.7% in the year to September, and 0.6% in September alone. At his press conference, Warsh described the meeting as “a heck of a family fight,” and said of financial conditions: “I’m unwilling and unable to call them tight,” according to Admiral Markets’ account.

Markets

The yield on the 10-year Treasury note was about 5.04% on Wednesday afternoon. Futures pricing put the chance of an increase at the next meeting, on 8–9 December, at about 84%, according to the CME FedWatch tool.

The war with Iran has pushed up fuel prices; US crude traded above $100 a barrel this week. Follow the 10-year yield and oil prices in our data hub.