Federal Reserve leaves interest rates unchanged despite rising inflation

The Federal Reserve voted Wednesday to keep interest rates unchanged, its final monetary policy decision before the midterm elections. The decision to hold rates steady came despite inflation that jumped from a 3.4% annual rate in August to 3.7% in September. Fed Chairman Kevin Warsh also announced that the central bank will reduce the number of meetings at which it votes on interest rates from eight to seven next year and by two in 2028. Warsh said that the seismic change to the schedule would help improve the “quality” of its decisions. A major driver of that inflation is the soaring cost of gas, diesel and crude oil. These higher prices have hit consumers hard, and many economists say the spillover effect of rising gas prices has started to show up across the broader economy.

In its post-decision statement, the Fed acknowledged the problem that inflation is causing but said it needs more data before moving forward with a rate hike. “Inflation remains elevated. 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 percent goal,” it said. The Fed’s preferred inflation gauge, the personal consumption expenditures price index, will not be released until Thursday; it is expected to touch 3.7%. “This suggests that the