Monetary policy

The Fed has kept interest rates unchanged at 3.75 per cent–4 per cent, in line with forecasts

The decision was taken despite high inflation, without providing any clear indication of future moves

28 October 2026

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Il presidente della Federal Reserve statunitense Kevin Warsh REUTERS/Evelyn Hockstein/Foto d'archivio REUTERS

2' min read

Translated by AI

Versione italiana

2' min read

Translated by AI

Versione italiana

With just a few days to go before the US mid-term elections, the Federal Reserve decided, by 10 votes to 2, to keep interest rates unchanged at 3.75 per cent–4 per cent. On 16 September, it had raised rates (by 25 basis points) for the first time since July 2023. The decision was taken despite high inflation, without providing any clear guidance on future moves.

The Federal Reserve has opted for a cautious approach in the fight against inflation, despite growing evidence that inflationary pressures are proving harder to curb than monetary policy makers had hoped. In a widely anticipated decision, the Federal Open Market Committee (FOMC) kept the overnight rate within a range of 3.75 per cent to 4 per cent, the level at which it has stood since the central bank approved a quarter-percentage-point rise in September.

‘Inflation remains high,’ reads the statement issued following the meeting. “The body of further information will help the Committee determine the most appropriate monetary policy stance to ensure a timely return of inflation to the Committee’s 2 per cent target. The Committee will ensure price stability.”

Two votes against

Two of the 12 voting members of the FOMC dissented from the decision: the governor Lisa Cook and the president of the Cleveland Fed, Beth Hammack, both of whom favoured a rate rise of a quarter of a percentage point. For Cook, this is the first time she has dissented since joining the Fed in 2022, having been appointed by Joe Biden.

The President of the Dallas Fed, Lorie Logan, and the President of the Minneapolis Fed, Neel Kashkari, had joined Hammack in voting against the committee’s latest decision at its July meeting, and both had argued that higher interest rates were needed. However, today they fell in line with the majority.

The Shadow of the Midterms

The mid-term elections have influenced the decision, according to analysts. Crucial votes will be held across the country on 3 November, with control of Congress at stake. Fed officials regard political independence as a cornerstone of the central bank, but some observers have speculated that officials did not want to raise interest rates just days before the elections. Trump, who appointed Warsh as Fed chairman, has been at odds with the central bank for years. In Trump’s view, interest rates should be much lower.

“Steady” economic growth, “resilient” domestic spending

Economic activity is expanding “at a steady pace” in the United States, according to the Fed. In its previous statement, economic growth was described as “solid”. “Although uncertainty remains high,” the statement continues, “partly due to geopolitical developments, domestic spending has proved resilient. Productivity growth is robust and capital investment is substantial. Employment growth has kept pace with the labour force and the unemployment rate has remained virtually unchanged.”

Warsh: ‘Mid-term elections play no role in decisions on interest rates’

The approaching mid-term elections in the United States played “no part” in the Fed’s decision to keep interest rates on hold. This was confirmed by the Fed’s chairman, Kevin Warsh.