Despite inflation still running far above the Fed's 2-percent target, the Federal Open Market Committee decided to leave interest rates unchanged at this week's policy meeting. In a 10-2 split decision, the committee decided to hold its benchmark interest rate steady in the range of 3.75 to 4.00 percent. In September, the Fed had raised its policy rate for the first time since July 2023 in response to this year's inflation resurgence, which was largely fueled by soaring energy prices in the wake of the Iran war.
The Fed's decision to hold rates steady for now, just days ahead of the midterm elections, doesn't mean that another rate hike isn't coming. In the Fed's latest projections, released last month, 16 of 18 Fed officials penciled in at least one more hike before the end of the year and CME FedWatch – a tool that tracks probabilities of future interest rate changes based on 30-day Fed funds futures prices – says there’s an 80-percent chance of a 25-basis point increase at the next FOMC meeting on December 8-9.
