America’s central bank chose patience on Wednesday, and two of its policymakers made clear they had run out of it. The Federal Reserve left its benchmark rate in a band of 3.75 to 4 per cent, a move markets had priced in for weeks. The decision passed ten votes to two, with both dissenters arguing that borrowing costs should have gone up by a quarter of a point instead.
One of the no votes was predictable. Beth Hammack, who runs the Cleveland Fed, has been pushing for tighter policy for months and dissented on the same grounds in July. The other was a first. Governor Lisa Cook had never voted against the majority since President Joe Biden appointed her in 2022, and she is currently fighting Donald Trump’s attempt to remove her from the board. The Supreme Court blocked his first try; a fresh effort is under way, with a hearing pencilled in for early November.
The statement itself reads like a central bank keeping its options open. Inflation, it says, “remains elevated”, yet the committee prefers to gather more evidence before acting again. The Fed also sounded more upbeat on growth, calling growth strong and solid business spending. Consumer prices are rising at roughly 3.7 per cent a year, far above the 2 per cent goal, a goal it has now missed for over half a decade.
Under chairman Kevin Warsh, the Fed raised rates by a quarter point in September. Timing explains much of this week’s pause: Americans vote in midterm elections on November 3, and few expected policymakers to move days before that.
Traders now see December as the likely date for the next increase, possibly followed by more in 2027. Warsh added a procedural twist, saying one meeting next year will be devoted entirely to long-term strategy, with no rate vote and no statement at all.
