The Federal Reserve left interest rates unchanged on Wednesday, deciding against a hike days before midterm elections that could pivot on inflation concerns.
The Federal Open Market Committee voted 10-2 to keep its benchmark rate in the 3.75% to 4% range.
“Productivity growth is strong, and capital investment is robust. Job gains have kept pace with the workforce, and the unemployment rate has changed little,” the committee said in a written statement. “Inflation remains elevated.”
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The decision to stand pat is a reprieve for President Trump, who says higher rates stymie his economic agenda. He has accused Fed members of making political decisions about rates to hold him back.
In September, the Fed raised rates for the first time in three years to control inflation.
The decision defied Mr. Trump’s wishes and clashed with his upbeat economic message to midterm voters who will determine whether his Republican Party controls Congress during his final two years in office.
Economic forecasters said the Fed would avoid a second increase right before Tuesday’s elections, and they were right, though central bankers could hike rates at their December meeting.
“Politics played no role in the decision,” said Fed Chairman Kevin Warsh. “I didn’t hear an utterance about politics. I didn’t hear a reference to politics, elections, what’s happening in the next week or so.”
Wall Street stocks traded in positive territory after the Fed decision.
The Fed raises rates when inflation is high to slow the economy and reduce demand for goods and services, hence achieving more stable prices.
The central bank’s benchmark rate trickles down to interest rates for personal and business loans and investments.
Mr. Trump appointed Mr. Warsh to replace the last chairman, Jerome H. Powell, with an eye toward lower rates.
But Mr. Warsh is caught between Mr. Trump’s wishes and an annual inflation rate that remains well above the Fed’s 2% target.
The Consumer Price Index rose 3.7% for the year ended in September, up from 3.4% in August.
“It’s our responsibility to get inflation down,” Mr. Warsh said.
Mr. Trump says the economy’s fundamentals and job picture remain strong and Americans deserve better borrowing terms through lower interest rates.
Two Fed committee members, Lisa Cook and Beth Hammack, bucked the majority and voted to raise rates by one-quarter of a percentage point.
Mr. Trump is trying to oust Ms. Cook from the Fed, saying she committed fraud in mortgage documents by listing separate properties as a primary residence.
Ms. Cook says she’s the victim of a political hit job by Mr. Trump and denies committing fraud.
Mr. Warsh refused to be drawn into a political brawl Wednesday when a reporter asked if he agreed with Mr. Trump’s belief that Democratic Fed appointees vote in ways that hurt the administration.
“We just came out of a heck of a family fight,” Mr. Warsh said of the committee’s meeting. “A serious, sober discussion. I think we came to the right policy decision for this moment, and I’m honored to be here, and I’m honored to be the chairman of this group.”
Also Wednesday, Mr. Warsh announced the Fed would meet eight times in 2027 and use one meeting to review broader strategy instead of voting on rates.
He said that in 2028, the Fed would set aside two meetings for strategy.
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