The Federal Reserve kept interest rates steady at 3.75% to 4%, despite inflation remaining elevated, in a decision marked by two officials calling for an immediate increase.
The Federal Open Market Committee voted 10-2 to maintain its benchmark rate. Governor Lisa Cook and Cleveland Fed president Beth Hammack both preferred to raise the federal funds target range by a quarter of a percentage point.
It was the first dissent by Ms Cook since she joined the Federal Reserve board in 2022. The vote was also the first time since October 1992 that a Fed governor and a regional bank president had dissented together in favour of higher rates.
Federal Reserve rate decision exposes divisions over inflation
Laura Ullrich, director of economic research for North America at Indeed Hiring Lab and a former Richmond Fed employee, said it was unusual for a governor and a regional president to dissent at the same meeting.
She said Ms Hammack’s position was not unexpected, having heard her explain her views at a conference in Cleveland two weeks earlier. “The Lisa Cook dissent was more surprising,” Ms Ullrich said.
Fed officials have become more willing to dissent in recent years, but governors and regional presidents have generally done so from opposing positions. In October 2025, Governor Stephen Miran called for a larger cut while Kansas City Fed president Jeff Schmid opposed any reduction.
In April, Mr Miran again wanted rates cut, while Ms Hammack, Minneapolis Fed president Neel Kashkari and Dallas Fed president Lorie Logan objected to language signalling that reductions were on the way.
At a press conference after the decision, Fed chair Kevin Warsh said officials had chosen to wait for more information before acting.
“What we decided to do was to call these questions, take stock of where we are, evaluate what we’re seeing out the window, ask ourselves whether the period right in front of us is likely to provide more clarity,” he said.
Mr Warsh added: “The overwhelming consensus is that what we’ve done in this monetary medicine is starting to work some, but there is no firm conclusions.”
The Fed retained its assessment that inflation remained elevated, while upgrading its description of economic activity from “solid” to “expanding at a strong pace”.
Consumer prices increased by 3.7% in the year to September. Before the meeting, traders had put the likelihood of a rate increase in December at 78%, according to CME Group’s FedWatch tool.
Ms Ullrich said inflation data had deteriorated since the previous meeting and that the probability of a December increase was “very, very high”. She said inflation expectations had also been creeping upwards, although they had remained more anchored than might have been expected.
Aubrey Woessner, an associate economist at Indeed Hiring Lab, said the decision to hold rates was difficult to reconcile with the Fed’s stated commitment to restoring price stability.
“Whether the public believes the Fed will bring inflation down in a timely manner matters for everyone,” she said.
The decision came less than a week before the midterm elections, but Ms Ullrich said the timing should not be interpreted as politically significant. She said the run-up to each meeting was driven by economic data, although the elections might factor into officials’ thinking “at some level”.
Ms Ullrich said Indeed’s job postings index had turned positive year on year in mid-September for the first time in four years, but described the labour market as remaining a “low hire, low fire environment”.
