The Fed holds interest rates steady in a split vote before midterm elections

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Two Fed governors cast dissenting votes and wanted to raise interest rates as soaring gas prices have pushed inflation higher

Al Drago/Bloomberg via Getty Images

The Federal Reserve held its benchmark interest rate steady at a range of 3.75% to 4% on Wednesday, with two of its 12 voting officials dissenting in favor of a quarter-point increase.

Fed Governor Lisa Cook and Cleveland Fed President Beth Hammack cast the dissenting votes. It marked the first time Cook has broken with the committee since her arrival at the central bank in 2022, according to CNBC.

President Donald Trump has sought to push Cook off the Fed board, citing allegations tied to what she reported when applying for home loans. A hearing is scheduled for early November.

The Fed's post-meeting statement said "inflation remains elevated" and that more information "will help the Committee determine the policy stance appropriate." The statement upgraded its read on growth, saying activity is "expanding at a strong pace" after calling it "solid" in September. It also left out the line that had given the reasoning behind September's hike.

The decision arrived fewer than seven days ahead of the Nov. 3 midterm elections, which will determine control of Congress. Trump has pressed time and again for lower rates. Narayana Kocherlakota, a former Minneapolis Fed president, said a decision not to raise rates now signals that officials are influenced by politics, according to CNN. He also said a one-meeting delay is not an "enormous blow to Fed independence."

Inflation has picked up since the Fed's last meeting. The Consumer Price Index rose 3.7% in September from a year earlier, up from 3.4% in August. Core CPI, which excludes food and energy, rose 2.6%.

Fed Chair Kevin Warsh was scheduled to hold a news conference at 2:30 p.m. ET. Warsh has steered clear of signaling in advance where the committee is headed. Traders had put the odds of a hike at the December meeting at 78% heading into the decision. The Fed releases minutes of regularly scheduled meetings three weeks after the policy decision.

The Fed raised its benchmark rate by a quarter point in September, its first increase since July 2023, on a unanimous 12-0 vote. At the July meeting, the committee held rates on a 9-3 vote, with Hammack, Dallas Fed President Lorie Logan and Minneapolis Fed President Neel Kashkari favoring a hike.

Logan and Kashkari voted with the majority on Wednesday. Sixteen of 18 policymakers projected in September that at least one more increase would come this year.

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