Fed holds rates at 3.75 to 4.00 per cent as inflation misses target

The Federal Reserve held its benchmark rate at 3.75 to 4.00 per cent on Wednesday, a 10-2 vote that leaves borrowing costs unchanged six days before midterm elections in which inflation has dominated the campaign.

The Federal Open Market Committee said it wanted more information before moving again, having raised rates in September for the first time in three years. "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 two per cent goal," the Fed said in its statement.

Two members dissented in the other direction: Governor Lisa Cook and Cleveland Fed President Beth Hammack called for an immediate quarter-point hike. The central bank has now missed its two per cent inflation target for more than five years, with households and businesses squeezed by sustained price increases.

President Donald Trump's war on Iran, launched in late February, has driven energy prices sharply higher and fed domestic inflation, alongside his broad tariff policies. An investment boom in artificial intelligence and the data centres built to support it has added to price pressure, the Fed's critics note.

The decision lands as the Democratic Party seeks to take both chambers of Congress from Trump's Republicans on Nov. 3, with his economic record a central issue and working-class households struggling despite largely stable overall growth.