WASHINGTON — As expected, the Federal Reserve left its benchmark interest rate unchanged Wednesday, keeping the target range at 3.75% to 4% as policymakers weighed strong economic activity against inflation that remains above the central bank’s 2% goal.
The Federal Open Market Committee voted 10-2 to hold rates following its two-day meeting, according to the Federal Reserve’s Oct. 28 statement. Federal Reserve Gov. Lisa Cook and Cleveland Fed President Beth Hammack dissented, favoring a quarter-percentage-point increase that would have raised the range to 4% to 4.25%.
The decision follows a unanimous quarter-point increase in September, when the Fed raised its target range to the current level. Wednesday’s split vote underscored disagreement over how quickly the central bank should move to curb persistent price pressures.
America’s Credit Union Economist Responds
The FOMC’s decision to keep the federal funds rate target range unchanged gives policymakers room to see how September’s increase works through the economy while balancing elevated inflation and a softening labor market,’ Dawit Kebede, senior economist with America’s Credit Unions, said in a statement. “Although the economy remains strong and unemployment is low, the press release points to elevated uncertainty and the need for more information before another rate decision. With underlying inflation still above the Fed’s target, today’s decision reads as a wait-and-see, and a December hike is more likely. Credit unions remain well positioned to help members manage the pressures of high prices and elevated rates.”
‘Growth is Solid’
In its statement, the Fed upgraded its description of economic growth from “solid” in September to “strong.” It cited resilient consumer and business spending, robust capital investment and productivity gains, while saying job growth has kept pace with the workforce and unemployment has changed little.
“Inflation remains elevated,” the committee said. It added that gathering more information would help determine the appropriate policy to return inflation to 2%, signaling that future rate decisions will depend on incoming economic data.
December Rate Increase Remains Possible
Reuters reported Wednesday that the Fed’s decision was widely anticipated and that investors continue to expect another rate increase, potentially beginning in December. Its reporting also pointed to concerns that inflationary pressures are spreading beyond energy costs.
A Reuters survey conducted Oct. 16-20 found that 94 of 100 economists expected the Fed to hold rates in October, while all 100 anticipated an increase in December. Those forecasts are expectations, not commitments by the Fed, which did not announce a December decision Wednesday.
Implications for Credit Unions and Borrowers
For credit unions, the decision leaves the Fed’s short-term rate benchmark unchanged for now, but continued uncertainty over the next move complicates loan pricing, deposit-rate decisions and interest-rate risk management. Institutions may still see market funding costs shift as expectations for December change.
The Fed’s next scheduled policy meeting is Dec. 8-9, when officials are also due to publish updated economic projections.
