Fed Holds Key Rate Steady, With 2 Dissents

The Federal Reserve has decided to sit tight, even as prices keep climbing. The central bank, as widely expected, left its benchmark rate unchanged at 3.75% to 4% on Wednesday, with traders betting the pause will be followed by another hike in December. Last month, the central bank hiked its key rate for the first time since 2023. The move puts the spotlight on Fed Chair Kevin Warsh's post-meeting comments, where investors will hunt for hints on how worried policymakers really are about inflation.

• Next week's midterm elections were "looming large" over the decision, the New York Times reports, though Fed officials say elections are not a factor in their interest rate discussions. President Trump strongly objected to last month's rate hike.

"While uncertainty remains elevated owing, in part, to geopolitical developments, domestic spending has been resilient," the Fed said in a statement. "Productivity growth is strong, and capital investment is robust. Job gains have kept pace with the workforce, and the unemployment rate has changed little. Inflation remains elevated." The Fed said two officials, Fed governor Lisa Cook and Federal Reserve Bank of Cleveland President Beth Hammack, dissented from the move, favoring a quarter-point rate hike.

• Inflation picked up last month and it remains well above the Fed's 2% target. Aditya Bhave, head of US economics at Bank of America, accuses the Fed of complacency, warning that inflation is likely to remain elevated and spread through the economy in the coming months, the AP reports. "Unless the Fed takes this problem more seriously and stops essentially making excuses about inflation, I think we're not going to get back to 2% until the next recession," Bhave says.

For consumers, the message is straightforward: with rates in their current range, borrowing stays expensive. Credit card rates are at their highest since 2025, 30-year mortgages are still north of 7%, and auto loans hover around the same level, squeezing household budgets, especially for lower- and middle-income borrowers, CNBC reports. The one upside: high-yield savings accounts look relatively attractive.