Fed Holds Rates at 3.75%-4% as Inflation Persists; Two Officials Dissent in Favor of a Hike

The Federal Reserve held its benchmark interest rate steady on Wednesday at a target range of 3.75% to 4%, leaving borrowing costs unchanged after September's first rate increase in three years. Two Federal Open Market Committee members — Governor Lisa Cook and Cleveland Fed President Beth Hammack — dissented in favor of a 0.25 percentage-point hike. Fed Chairman Kevin Warsh said inflation remains "too high" and has run above the committee's 2% objective for close to six years. The Consumer Price Index rose at a 3.7% annual rate last month, while core inflation rose 2.6%, both above economist expectations. Warsh declined to signal whether officials will raise rates at the Dec. 8-9 meeting. Oxford Economics' Michael Pearce said the dissents and statement wording suggest a December hike, while Pantheon Macroeconomics' Samuel Tombs said markets are pricing 0.75 percentage points of additional tightening over the next year. Warsh also announced that starting in 2027, one of the Fed's eight annual meetings will be reserved for policy strategy without a rate vote or statement.