Fed holds interest rates steady in last decision before midterms
News Source
β’Wed, 28 Oct 2026 18:07:23 GMT
π° What Happened
The US Federal Reserve left interest rates unchanged on Wednesday. The range stays at 3.75% to 4%. It was the central bank's last meeting before next week's midterm elections. Two of the 12 board members voted to raise rates instead. Last month the Fed lifted rates for the first time since 2023, saying inflation was too high. Prices rose 3.7% in the year to September, up from 3.4% in August. Chair Kevin Warsh said the bank cannot control the price of oil or food, but can stop price rises from spreading across the economy.
π The Backstory
Inflation has stayed above the Fed's 2% target for years. Most of this year it has run above 3%. The war with Iran and the closure of the Strait of Hormuz pushed oil above $117 a barrel this week, the highest in six months. President Donald Trump attacked September's rate rise, saying rates should be 1% or less. Economists note that rate rises work poorly against price shocks caused by supply, because they slow an economy that is not overheated. The Fed has raised rates while job and spending data soften.
π― Why It Matters
US rates help set the price of borrowing worldwide, including in Australia. A pause keeps some pressure off mortgages but leaves inflation risk alive until after the vote.
The US Federal Reserve left interest rates unchanged on Wednesday. The range stays at 3.75% to 4%. It was the central bank's last meeting before next week's midterm elections. Two of the 12 board members voted to raise rates instead. Last month the Fed lifted rates for the first time since 2023, saying inflation was too high. Prices rose 3.7% in the year to September, up from 3.4% in August. Chair Kevin Warsh said the bank cannot control the price of oil or food, but can stop price rises from spreading across the economy.
Inflation has stayed above the Fed's 2% target for years. Most of this year it has run above 3%. The war with Iran and the closure of the Strait of Hormuz pushed oil above $117 a barrel this week, the highest in six months. President Donald Trump attacked September's rate rise, saying rates should be 1% or less. Economists note that rate rises work poorly against price shocks caused by supply, because they slow an economy that is not overheated. The Fed has raised rates while job and spending data soften.
US rates help set the price of borrowing worldwide, including in Australia. A pause keeps some pressure off mortgages but leaves inflation risk alive until after the vote.