WASHINGTON -- The Federal Reserve held interest rates steady Wednesday after last month's increase, buying time to decide whether more rate hikes are needed to keep energy costs and an artificial-intelligence building boom from seeping into broader inflation.
The decision, which maintained the Fed's benchmark rate in a range between 3.75% and 4%, was approved on a 10-2 vote. Fed governor Lisa Cook and Cleveland Fed President Beth Hammack dissented in favor of a quarter-point increase.
In its policy statement, the rate-setting committee said little to challenge expectations on Wall Street that another increase was likely at its next meeting in December. "The accumulation of more information will help the committee determine the policy stance appropriate to ensure a timely return of inflation to the committee's 2% goal," it said.
In September, most officials projected they would raise rates at least once more this year, at either this week's meeting or the one that concludes Dec. 9.
Fed Chairman Kevin Warsh is scheduled to discuss the decision at a news conference at 2:30 p.m. Eastern time. Investors will be listening for more on how officials reconciled the decision with his pledge this summer to bring inflation back to 2% in a more timely way, particularly after another month of firm price readings and with the Iran war threatening to reignite.
The decision was widely expected. Several officials, including Warsh's two top deputies, said in the weeks after last month's increase that there was no urgency to raise rates again. Warsh did nothing to change that impression in public remarks two weeks ago. After that, investors saw a one-in-seven chance of an increase this week.
Hammack has dissented before in favor of tighter policy, most recently in July. She has argued the Fed should make smaller adjustments now to avoid the prospect of bigger -- and potentially more destabilizing -- rate increases later.
But the dissent from Cook was her first in more than four years on the policy-setting committee. Two other officials who voted with Hammack in favor of raising rates at the July meeting sided with the majority on Wednesday to hold steady.
President Trump has been seeking to remove Cook from her position since August 2025, citing allegations of mortgage fraud that she denies. In June, the Supreme Court allowed her to remain in her position while she contests the attempted firing in court, a setback for Trump.
Earlier this month, the White House said it would convene an in-person hearing with Cook next week at the White House to review her case, but Cook's lawyers have said she is unable to attend while traveling overseas on Fed business.
The Fed's decision comes just days before the Nov. 3 midterm elections. The Fed has previously raised rates shortly before elections, most recently in 2022, though those moves had been well telegraphed to investors. An increase that investors hadn't anticipated could have put the central bank under a political glare it generally tries to avoid.
Bond markets have been volatile recently. Long-term Treasury yields climbed rapidly last month and reached their highest level in more than two decades in early October before falling last week, when a selloff in technology stocks sent investors into the safety of government bonds. Borrowing costs have risen for some lower-rated companies tied to the AI build-out.
For households, Wednesday's decision offers little relief because investors still expect further rate increases into next year. The Fed's benchmark rate most directly affects credit cards and new auto loans. Mortgage rates track longer-term Treasury yields, which reflect investors' expectations for future Fed moves, inflation and economic growth, and they have also moved up.
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