WASHINGTON - The US Federal Reserve on Wednesday held interest rates steady, even as its Chairman Kevin Warsh said inflation remained "too high" but insisted that politics played no part in the central bank's decision not to continue raising rates days before crucial midterm elections.
The 12-member Federal Open Market Committee voted 10-2 to hold rates at a target range between 3.75 to 4.00 percent, citing the need for more data in the fight against inflation, after having hiked for the first time in three years at its previous meeting in September.
Two members of the committee, Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented, calling instead for an immediate quarter-point rate hike.
"Energy and related prices have moved higher again in recent weeks, and our job is to ensure that relative price changes in some sectors do not broaden out across the economy," Warsh told reporters.
Still, he said the FOMC needed more information in the coming weeks to "determine the policy stance appropriate to ensure a timely return of inflation to the two-percent goal."
The committee is scheduled to meet again in early December.
- 'Politics played no role' -
The central bank has missed its inflation target for more than five years, with households and businesses battered by sustained price increases.
US President Donald Trump's war on Iran, launched in late February, has sent energy prices skyrocketing and fueled domestic inflation, alongside his wide-ranging tariff policies.
Prices have also been driven by an investment boom in artificial intelligence (AI) technology and the build-out of huge data centers to support it.
The decision comes six days ahead of the November 3 midterm elections, in which the Democratic Party is seeking to wrest control of both houses of Congress from Trump's Republicans.
Trump's handling of the economy has been a key issue throughout the campaign, with working-class households across the country struggling to make ends meet despite largely stable overall economic growth.
US consumer inflation came in hotter than expected in September, clocking in at 3.7 percent, edging back towards a three-year high established in May.
"Politics played no role in the decision," said Warsh, who has insisted that he supports the Fed's independence despite repeated attacks on the institution by Trump since he took office.
Speaking to broadcaster CNBC after the Fed's meeting, US Treasury Secretary Scott Bessent said he and Trump had "great confidence" in Warsh.
"I have great confidence in Chair Warsh to steer the Fed between the right combination of growth and inflation because what you don't want to do is cause enough of a growth slowdown that energy consumption would drop," he said.
- AFP