US Fed Holds Interest Rates Steady Despite Hot Inflation

Quick Answer: The US Federal Reserve held its target range at 3.75-4.00% on Wednesday, voting 10-2, even as Chairman Kevin Warsh said inflation remained “too high”. Governor Lisa Cook and Beth Hammack wanted an immediate quarter-point hike. The report names no Bursa Malaysia-listed company, so Malaysian shareholders should track how US rate settings and energy prices flow into the stocks they hold.

What Did the US Fed Decide on Interest Rates?

US Fed interest rates decision chart for Bursa investors — Finance chart: the US Fed kept its rate range unchanged.

The US Federal Reserve kept its target range at 3.75-4.00%, after hiking for the first time in three years at its September meeting. The 12-member Federal Open Market Committee voted 10-2 to hold.

Warsh said the committee needed more data to “determine the policy stance appropriate to ensure a timely return of inflation to the two-per-cent goal.” The committee meets again in early December.

Why Did Two Fed Members Vote for a Rate Hike?

Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented, calling for an immediate quarter-point hike. Wendy Edelberg of the Brookings Institution told AFP that holding after the September hike was potentially contradictory.

Edelberg said: “If there was a reason to raise interest rates at the last meeting, I think that there’s just as compelling of an economic reason to raise interest rates at this meeting.” US unemployment has stayed largely stable around 4.2% over the last year.

How Hot Is US Inflation Right Now?

US consumer inflation came in at 3.7% in September, edging back toward the three-year high set in May. The Fed has missed its inflation target for more than five years.

President Donald Trump’s war on Iran, launched in late February, sent energy prices skyrocketing. Tariff policies and an investment boom in artificial intelligence (AI), including huge data centre build-outs, also fuelled prices.

Warsh questioned whether the AI-led boom was driving inflation. “Is the economy running too hot? Is the economy running too strong? That isn’t the judgment of most of my colleagues,” he said.

Did Politics Influence the Fed’s Decision?

The decision came six days before the Nov 3 midterm elections, where the Democratic Party seeks control of both houses of Congress. Warsh insisted “politics played no role in the decision.”

US Treasury Secretary Scott Bessent said he and Trump had “great confidence” in Warsh. Bessent added that the goal is avoiding a growth slowdown that would cut energy consumption.

How Many Times Will the Fed Set Interest Rates in 2027 and 2028?

The Fed will still meet eight times a year in 2027 and 2028. It will set interest rates only seven times next year and six times the year after that.

Canada’s central bank also raised its key rate to 2.5%, its first hike since July 2023. Other advanced economies are also grappling with high inflation.

Which Bursa Sectors Are Exposed to These Fed Drivers?

The Fed’s inflation drivers are energy prices and AI data centre spending. These are the themes worth monitoring when screening Bursa-listed names with energy or technology exposure.

The source gives no stock code, dividend, target price or valuation for any Bursa company. Any stock-specific view needs fresh company announcements and research house reports.

Key Takeaways

Rate hold: The US Fed kept its target range at 3.75-4.00% in a 10-2 vote.
Dissent: Lisa Cook and Beth Hammack wanted an immediate quarter-point hike.
Inflation: US consumer inflation hit 3.7% in September.
Drivers: Energy prices after the Iran war, tariffs and AI data centre spending.
Next meeting: Early December, with eight scheduled meetings a year in 2027 and 2028.

For a broader look at how AI themes are screened, read AI Stock Analysis for Malaysians.

Frequently Asked Questions

What is the US Fed interest rate target range?

The US Federal Reserve held its target range at 3.75-4.00% in a 10-2 vote. The committee cited the need for more data in the fight against inflation.

Why did the US Fed hold rates despite high inflation?

Warsh said inflation remained “too high” but insisted politics played no role. US consumer inflation was 3.7% in September, and the Fed has missed its target for more than five years.

When is the next US Fed rate decision?

The Federal Open Market Committee is scheduled to meet again in early December. The committee will need more information before then to set its policy stance.

How do US Fed rate decisions affect Bursa Malaysia stocks?

The source does not link the decision to any Bursa Malaysia-listed company. The inflation drivers it names, energy prices and AI data centre spending, are the factors to track for Bursa names with those exposures.

Disclaimer: This article is for information only and is not investment advice. Always do your own research before making any investment decision.

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