Economy News

Fed holds rates as US economy grows 3.4%, but inflation climbs to 3.7%

The US Federal Reserve left interest rates unchanged on Wednesday 28 October at its last meeting before the midterm elections. The Guardian reports that two of the 12 board members voted against the pause, preferring a quarter-point rise, and that Fed chair Kevin Warsh said politics played no role, even though inflation remains above 3%.

A day later, Commerce Department data showed the economy grew at a 3.4% annualised rate in the third quarter, ahead of the 3.2% that economists polled by Reuters had expected. But inflation accelerated to 3.7% in September, and the Guardian notes a sharp deterioration in consumer sentiment less than a week before voters decide control of Congress.

How each outlet framed it

• The Guardian — the political timing: rates at one of the highest pre-election levels in over 20 years, and solid growth that contrasts with gloomy consumers.
• BBC News — the household view: what a rate pause and a growing economy mean for mortgages, car loans and savings.

Where the numbers differ: the Fed decision describes a pause in rate hikes, not cuts. Two officials wanted a rise, which suggests the next move could still be upwards if inflation stays near 3.7%.

What we don't know yet: how the midterm result and the September inflation jump will shape the Fed's next decision, and whether stronger-than-expected growth gives it room to raise rates again.