US Federal Reserve keeps rates unchanged, leaves door open to further hikes

The US Federal Reserve held interest rates unchanged at 3.75%-4% in a 10-2 vote, as policymakers weighed persistent inflation against a resilient economy and waited for further data before deciding their next move. The decision came ahead of next week’s US midterm elections, with the central bank acknowledging that inflation remains elevated despite signs of continued economic strength.Fed Chair Kevin Warsh said economic activity was expanding at a “strong” pace, upgrading the Fed’s assessment from “solid” at its September meeting. Domestic spending remained resilient, productivity growth was strong, investment robust and job gains had kept pace with the workforce, while the unemployment rate had changed little. However, inflation continues to run above the Fed’s 2% target, leaving policymakers divided over whether monetary policy needs to tighten further.Governors Lisa Cook and Beth Hammack dissented from the decision, favouring a 25-basis-point rate hike.