What we covered here
- A pause after last month’s hike: The Federal Reserve said Wednesday it is keeping its benchmark interest rate at current levels this month after raising rates in September for the first time since 2023.
- Still-stubborn inflation: The war with Iran continues to push up energy prices, with higher costs starting to spread to other goods and services. That has complicated the picture for Fed officials as they balance the impact of persistently higher inflation with higher borrowing costs on already-stretched consumers.
- Two dissents: Fed Governor Lisa Cook and Cleveland Fed President Beth Hammack both opted for a quarter-point rate hike at this month’s meeting. Hammack also dissented in July, again favoring a hike. Cook has never dissented in her four years in this post.
- Changes at the Fed: Chairman Kevin Warsh announced a key change in the way the central bank decides on monetary policy, reducing the number of rate-setting meetings from eight to seven next year and six the following.
Updates
(29)Our live coverage of the Federal Reserve’s latest policy decision has ended. For more analysis, read here.
Wall Street reacts to Warsh's decision to change rate-setting schedule
Investors responded Wednesday to Federal Reserve Chairman Kevin Warsh’s announcement about a major change to the Fed’s rate decision schedule.
Instead of eight rate decisions per year, the Fed will have seven next year and six the year after, Warsh said. The other meetings will be used as strategy meetings but will not include rate decisions.
The change will take place next fall, Warsh said. He described the reason for the change as creating more time and space for “strategic deliberations, for thinking anew about big questions, looking out over longer time horizons.”
In general, the Fed is also able to call an emergency rate-decision meeting as needed.
Investors are still adapting to Warsh’s vision for the Fed, and the announcement stood out as an important development in an otherwise as-expected Fed rate decision day.
While Wall Street is awaiting more information on the development, investors, economists and analysts are digesting what they can understand. Here’s what they’re saying:
- “The Fed’s new meeting schedule appears consistent with Chairman Warsh’s push for less forward guidance and less frequent signaling to markets.” — Tony Miano, global investment strategy analyst at Wells Fargo Investment Institute. “Less Fed communication could mean more market volatility.”
- “Warsh reforms to enter a new phase next year.” — Thomas Ryan, senior North America economist at Capital Economics. “We do not think this will significantly undermine the Fed’s ability to respond to incoming data, as it will still be able to assess two payrolls and CPI reports between meetings.”
- “The market has adjusted to Warsh’s communication style, but there might be a ways to go before they are fully on the same page.” — Thomas Simons, chief US economist at Jefferies.
- “I think that goes along with his idea that they want to take their time and be a little bit more deliberate with policy.” — Thomas Urano, co-chief investment officer at Sage Advisory. “Maybe the thinking is that eight policy adjustments per year is just a bit too much, given the slow-moving nature of policy and its impact on the economy.”
Powell was blasted for calling inflation “transitory." Now Bessent is singing the same tune
In 2022, then-Federal Reserve Chair Jerome Powell was blasted for repeatedly calling inflation “transitory” as it began inching closer to 40-year highs. Powell, at the time, said he believed the pace of price increases would slow once supply chain bottlenecks cleared and more businesses could safely reopen.
But once it became clear that it was not going to fade on its own, the Fed quickly had to play catch-up to get inflation under control. Powell retired the word, but not before it became a defining part of his legacy.
Now, Treasury Secretary Scott Bessent is trying to convince Americans that the inflation they’re experiencing is, in fact, transitory.
“I think they should have an open mind in terms of the transitory nature of the supply shock,” Bessent said of Fed officials, in a CNBC interview on Wednesday shortly after the Fed announced its decision to leave rates unchanged at its October policy meeting.
In essence, Bessent is saying Fed officials should look past the current run-up in inflation because it predominantly stems from a rise in energy costs, which could prove temporary.
At the same time, inflation has seeped its way into a variety of goods and services beyond the pump.
Stocks close higher after Fed rate decision
The stock market gained slightly after the Federal Reserve held interest rates steady Wednesday, matching Wall Street’s expectations.
The S&P 500 and Nasdaq Composite each gained almost 0.3%. The Dow rose almost 100 points, or 0.2%. The indexes are up three days in a row.
The Fed updated its policy statement to say economic activity is growing at a “strong” pace, compared to a “solid” pace in the statement in September.
During remarks, Fed Chairman Kevin Warsh repeatedly asserted that the central bank is committed to reining in inflation. “We will deliver price stability, no ifs, ands or buts, and that continues to be the case,” he said.
Stocks bounced around during trading: The S&P 500 rose as much as 0.46%, gave up those gains and then pushed higher to end the day in the green.
It was the first time the S&P 500 closed higher on a Fed rate decision day since December 2025. The Fed held rates steady five meetings in a row from January to July, then raised rates in September before holding steady today.
Heading into the rate decision, traders widely expected the Fed to hold rates steady, followed by a rate hike in December. The Fed matched the market’s expectation today, and the odds for a December hike rose to 85% from 78% one day ago, according to CME FedWatch.
“This Fed still has a job to do if the type of price stability that Chair Warsh has described is to be achieved,” strategists at ING wrote in a note.
The 10-year yield rose three basis points to 5.02%. The US dollar index fell 0.2%. Gold futures dipped as much as 0.9% during trading before erasing losses and gaining 0.3%.
Borrowing rates may hold steady but not for everyone
Two primary sources of US consumer debt – credit cards and auto loans – have been a sore point in family budgets of late.
And there is nothing to suggest much will change in the fourth quarter.
Credit cards: It doesn’t matter that the Fed left its key rate unchanged – or whether the Fed hikes or lowers rate by a quarter point or a half point in December. You are still paying a punitive rate if you carry a credit card balance.
“The average credit card rate sits around 20%,” said Bankrate credit card expert Ana Staples in an email.
You can always call your card issuers to see if they will lower your rate by a few points. But you’ll likely need a much bigger reduction to make paying off your debt feasible.
“A 0% intro APR balance transfer card is the most direct way to cut interest costs for consumers who can qualify,” Staples said.
Auto loans: The average APR on new car loans was 7% in the third quarter, according to Edmunds.com. But that masks two trends raising purchasers’ costs.
A record 25.5% of new-car buyers now finance their vehicles for 84 months or longer, and 29% of new-car buyers trading in an old car have been rolling negative equity into their new loans, said Joseph Yoon, a senior analyst at Edmunds.
So even though the Fed stood pat, such borrowers will still be charged higher-than-average rates in the fourth quarter.
One group of buyers, though, may catch a break. “Well-qualified, prime buyers with clean trades will benefit from competitive, holiday-incentivized deals, while underwater shoppers will find themselves locked into 8%-or-higher APRs just to finance vehicles they owe far more on than they are worth,” Yoon said.
Whichever group you’re in, three ways to minimize expenses: Improve your credit score. Choose the least expensive car that meets your needs. And shop for the best rate.
You can still make good money on your savings despite the Fed's punt on rate hike
While the Federal Reserve did not raise interest rates on Wednesday, it is still expected to do so in December.
So, position your savings now to get the best interest rates for the foreseeable future that either beat or at least keep pace with inflation.
Online high-yield savings accounts: Thanks to the quarter-point Fed rate hike in September, many FDIC-insured online banks have increased their variable rates. The highest-paying ones are now offering between 4.3% and 4.5%, according to Bankrate.com and DepositQuest.com.
Money market funds: These offer another easy way to ensure your money is continually earning a competitive variable yield. While not FDIC-insured, they are low-risk because they invest in very short-term, high-quality government and corporate debt.
The average 7-day yield on money market funds as was 3.73% as of Tuesday, according to Crane Data. Among the largest and lowest cost money market funds is the Vanguard Federal Money Market Index, which had a 7-day yield of 3.87% on Tuesday.
Certificates of deposit: If you shop for an FDIC-insured CD through an online brokerage you’ll have your pick of bank CDs of various durations. For instance, for CDs with durations ranging from three months to five years, average rates were between 4.26% and 5.25% on Schwab.com on Wednesday morning.
But looking ahead, “CD rates may start to fall if the recent decline in Treasury yields continues,” said Ken Tumin, cofounder of Deposits.com.
US Treasuries: US bills and notes of varying durations offer a place to park your cash while earning interest and guaranteeing you will get your principal back if you hold the Treasury to maturity.
Yields on Treasuries ranging in length from three months to five years were between 4.19% and 4.89% Wednesday morning on Schwab.com.
Mortgage rates have climbed above 7% in the last month
The average 30-year fixed mortgage rate breached 7% for the first time since January 2025 at the end of September, eventually climbing to a three-year high of 7.4% this month.
Last week, the average 30-year fixed mortgage eased slightly to 7.32%, according to Freddie Mac.
Home borrowing rates aren’t directly tied to the Federal Reserve’s rate decisions. Instead, they tend to track the 10-year Treasury yield, which reflects investors’ inflation expectations and outlook for future Fed policy. The 10-year Treasury yield and the broader bond market have been on a volatile ride, caught between renewed inflation fears, an oil shock tied to the Iran conflict, ballooning US deficits, and an AI investment boom.
“Even with the Fed choosing to keep rates unchanged, mortgage rates can and will likely continue to fluctuate because they reflect bond market activity and inflation data,” said Jeffrey Ruben, the president of WSFS Home Lending at WSFS Bank.
Catch up on our Fed live analysis chat
CNN experts discussed the Fed decision and Lisa Cook ahead of the midterms. Read their conversation here.
Warsh: "Politics played no role in the decision"
Federal Reserve Chairman Kevin Warsh denied any role politics played in the central bank’s decision to leave rates unchanged six days before the midterm elections.
Over the two days that Fed officials met this week to debate monetary policy, Warsh said he “didn’t hear an utterance about politics.”
“I don’t believe it had any role in the decision, not just for me, but for my colleagues around the room,” he said at the post-meeting press conference on Wednesday.
That said, he subtly hinted that the central bankers may be learning toward a hike when they meet again after the elections in December.
“It’s an information-rich interval in the coming period, having nothing to do with politics,” Warsh told reporters.
The Fed has over the past decade made several rate changes around midterm and presidential elections. Like Warsh, other Fed officials have stressed that rate decisions are made irrespective of politics.
Fed to have fewer rate-setting meetings next year, Warsh says
In his post-meeting press conference Wednesday, Federal Reserve Chairman Kevin Warsh announced sweeping changes for the central bank in the coming years.
Instead of meeting eight times a year to vote on where interest rates should be, Warsh said officials would consider rate changes at seven of eight meetings next year and six of eight meetings in 2028.
The meetings where interest rate votes aren’t held will instead focus on “thinking anew about big questions” and longer-term issues, Warsh told reporters.
This month's pause may mean the Fed has to go bigger in December
Officials’ decision to leave interest rates unchanged at this month’s meeting may end up creating more urgency to hike rates when officials reconvene again in December.
Inflation data was already running hot ahead of this month’s meeting, with price increases hitting consumers well beyond the gas pump. If that trend persists, officials may feel pressure to deliver a hike larger than September’s quarter-point move, making up for this month’s inaction and heading off further inflation.
Stocks are mixed after Fed holds rates steady
Stocks were little changed after the Federal Reserve held interest rates steady.
The S&P 500 fluctuated and was up 0.1%, while the Nasdaq Composite was down 0.1%.
In the bond market, the 10-year Treasury yield ticked higher to 5.05%.
Elsewhere, the US dollar index ticked higher. Gold futures fell 0.7%.
“While uncertainty remains elevated owing, in part, to geopolitical developments, domestic spending has been resilient,” the Fed said in a statement. “Job gains have kept pace with the workforce, and the unemployment rate has changed little.”
Traders’ focus now turns to Fed Chairman Kevin Warsh’s post-meeting remarks.
“The more meaningful market risk remains Warsh’s press conference,” Ian Lyngen, head of US rates strategy at BMO Capital Markets, said in a note. “Investors will be looking for any further context for the pause.”
Dissent by Fed Gov. Lisa Cook could prompt angry response from Trump
Federal Reserve Gov. Lisa Cook, whom Trump has repeatedly tried to oust over unproven allegations of mortgage fraud, cast a dissenting vote favoring a quarter-point interest rate hike at this month’s monetary policy meeting. The majority of officials voted to leave rates unchanged.
Trump has been vocal about his desires for the Fed to lower rates and has taken extraordinary measures, including suing former Fed Chair Jerome Powell, in an effort to bring rates down. He also recently formed a committee of his own appointees to investigate the allegations against Cook.
Cook’s lawyers have taken issue with the committee and said she would not be able to attend the hearing due to scheduling conflicts.
Cook’s dissenting vote on Wednesday was her first. Cleveland Fed President Beth Hammack, who has more frequently cast dissenting votes, also preferred a quarter-point hike.
This marks the second monetary policy meeting during Kevin Warsh’s chairmanship, which began in May, where officials on the Fed’s 12-person rate-setting committee cast dissenting votes.
Fed decision was not unanimous
Unlike the Federal Reserve’s last decision, this one was not unanimous. Two leaders — Fed Governor Lisa Cook and Cleveland Fed President Beth Hammack – voted against today’s move. They preferred to go ahead and raise rates by a quarter point.
Cook has never dissented on a monetary policy decision; Hammack has raised concerns about inflation for months.
This month, President Donald Trump renewed his push to oust Cook from the Fed board.
Policymakers are contending with inflation that has for years stayed higher than normal. Price increases are now being driven by gas and energy costs, which have been on an upward climb since the start of the war with Iran. The job market is stable, albeit lackluster, which could make the Fed more comfortable raising rates further and slowing the economy.
In fact, Fed leaders on Wednesday said economic activity is growing at a “strong pace” and that domestic spending has been “resilient.” Job gains are keeping pace with the workforce, and the unemployment rate hasn’t changed much.
The Fed holds interest rates steady, signals rate hike later this year
The Federal Reserve on Wednesday held interest rates steady, even as inflation continues to weigh on American households.
The widely expected move leaves the Fed’s benchmark interest rate at a range between 3.75% and 4%.
In a statement, Fed leaders said uncertainty was still high, in part because of “geopolitical developments.”
Officials also said “the accumulation of more information will help” them determine next steps “to ensure a timely return of inflation” to normal levels. That new language indicates policymakers are still open to another hike down the road.
At the Fed’s September meeting, central bankers signaled another hike before the end of the year. That suggests another quarter-point increase could come when officials convene again in early December, depending on how the economy evolves.
Fed Chairman Kevin Warsh is set to take questions at a news conference at 2:30 pm ET.
With less than a week to go until the midterm elections, he could face questions about political pressure on the central bank. While Fed leaders routinely say they operate independently and are guided by economic data, Trump has repeatedly attacked the Fed for not doing enough to stimulate the economy.
Trump remains supportive of Warsh despite recent rate hike
President Donald Trump has not been shy about his desire for the Federal Reserve to lower interest rates.
He specifically said he was tapping Kevin Warsh to lead the central bank because he believed Warsh would listen to him more, unlike former Chair Jerome Powell, whose term ended in May and who repeatedly resisted his calls for lower rates. But Warsh hasn’t given in to Trump, either.
His first major move as head of the central bank was last month’s rate hike, which many took as proof that he wasn’t going to let politics interfere with his job.
Trump has stood by Warsh, though. Ahead of the September meeting, Trump told reporters he spoke with Warsh and said, “You might as well vote with the board because it’s not going to matter,” referring to the Fed’s 12-person rate-setting committee Warsh sits on. Trump called that board “very hostile” and “very political,” though the Fed firmly defends its independence from political pressure.
What to expect from the Fed today
The Federal Reserve is widely expected to keep interest rates steady on Wednesday, even as officials weigh another hike this year to tame rising inflation.
Central bankers have struggled to tame inflation for years. But gas and energy prices have been on an upward climb since the war in Iran began, and came in hotter than expected in September.
Still, the Fed’s moves may only do so much. Tweaking interest rates can’t bring down gas prices, for example. Rates are designed to slow or stimulate the economy broadly and without targeting individual industries.
At his 2:30 p.m. press conference, Fed Chairman Kevin Warsh is likely to face questions on the Fed’s next move. His answers may be brief: Warsh has come out strong against any “forward guidance,” which was used for years to tee up future decisions.
Warsh may also face questions as to whether the Fed held off on a hike because of political pressure just days before the midterm elections.
Fed leaders defend their independence. Meanwhile, President Donald Trump has repeatedly attacked the central bank for not lowering rates, and his approval rating has tanked over cost-of-living issues.
What did the Fed do earlier this year? Catch up below
Traders widely expect the Federal Reserve to hold interest rates steady today.
The CNN Business team covers each Fed rate decision. The links below direct to past coverage on Fed decision days this year.
- September: Fed raises interest rates for the first time since 2023
- July: Fed holds interest rates steady after cliffhanger meeting, but three officials dissent
- June: Fed leaves interest rates unchanged but signals higher rates are ahead
- April: Fed keeps rates unchanged in Powell’s last meeting as chair
- March: Fed keeps rates unchanged for second consecutive meeting
- January: Fed holds interest rates steady for first time since July
Inflation is shifting well beyond the gas pump
The latest batch of inflation data showed that prices not only are climbing faster than they have in several months but also much more broadly.
The September Consumer Price Index showed that prices rose 0.6% in September, bringing the annual rate of inflation to 3.7% (that’s up from 0.4% and 3.4%, respectively, in August). About half of that monthly gain can be attributed to rising gas prices, which have shot higher because of the monthslong war in Iran.
But even when stripping out gas and food (categories that can be more volatile than others), prices were still rising faster than anticipated.
Core CPI, a closely watched gauge of underlying inflation, increased at a hotter-than-expected 0.3% monthly rate and 2.6% annual rate.
It’s not just gas. It’s the car repair, the doctor’s visit, the plane ticket, the computer upgrade, the new clothes that are experiencing uncomfortably high price hikes.
Thursday’s Personal Consumption Expenditures price index (the inflation gauge used by the Federal Reserve for its 2% target) is expected to show a similar trend: Economists expect prices to rise 0.5% from August and for the annual rate to move higher to 3.6% from 3.4%.
And it’s likely not over: A separate report on wholesale inflation showed that US businesses in September experienced their worst inflation in four years.
Here’s what Wall Street expects from the Fed and Kevin Warsh
Stocks were little changed ahead of the Federal Reserve’s decision on interest rates: The S&P 500 was up 0.2%, while the Nasdaq Composite was flat.
Wall Street widely expects the Fed to hold interest rates steady. Economists at Bank of America are an outlier, forecasting a rate hike but acknowledging it is unlikely. Traders are pricing in a 93% chance of a hold, according to CME FedWatch.
Here’s what analysts and economists are saying ahead of the rate decision.
- “If the Fed holds … as expected, Chair Warsh will have to explain why.” —Michael Feroli, chief US economist at JPMorgan. “A decision to leave rates unchanged less than a week before the midterm elections that goes unexplained would only encourage thoughts that policy is being driven by considerations other than employment and inflation.”
- “Though the Fed is widely expected to remain on hold at this meeting, focus will be on any hawkish dissents and press conference signals on the path of rates for December and 2027.” — Mandy Xu, head of derivatives market intelligence at Cboe Global Markets.
- “We expect the Chairman to avoid signaling any sort of forward guidance, but he will certainly be pressed on the recent inflation figures that came in unexpectedly hot.” — George Goncalves, head of US macro strategy at MUFG.
- “A clear dichotomy has emerged: inflation data suggest more urgency, while key FOMC members continue to favor patience.” — Michael Gapen, chief US economist at Morgan Stanley. “Oil price persistence is critical: persistent shocks tend to push core inflation more than transitory ones.”