Fed Holds Rates Steady in Split Decision as Two Officials Favor Hike

The Federal Reserve held interest rates steady in its final policy decision before the US midterm elections, although two officials dissented in favor of another increase.

Federal Reserve Chair Kevin Warsh defended the central bank’s decision to keep interest rates unchanged despite elevated inflation and calls for lower borrowing costs.

The central bank’s decision leaves open the possibility of further tightening if inflation remains elevated.

“It’s unlikely that anything will stop them from raising rates” at their December meeting, Chris Zaccarelli, chief investment officer of Northlight Asset Management, said in emailed comments shared with Forbes Daily.

The Federal Open Market Committee voted 10-2 on Wednesday to maintain its benchmark interest rate at a range of 3.75% to 4%.

Fed governors Lisa Cook and Cleveland Fed President Beth Hammack dissented, favoring a quarter-percentage-point increase.

Microsoft shares briefly surged after the company reported quarterly net income of $36.6 billion, while revenue from Microsoft Cloud and its Azure platform continued to grow.

On Wednesday, the S&P 500 and Nasdaq Composite each gained 0.3%, while the Dow Jones Industrial Average advanced 0.2% following the Fed announcement.

The decision was unlikely to please US President Donald Trump, who has repeatedly called for the Fed to reduce borrowing costs and has advocated a benchmark rate of 1%.

Warsh and the other policymakers have maintained that monetary policy must be guided by economic conditions and the central bank’s inflation and employment objectives.