Key facts
- Federal Reserve held benchmark interest rate steady at 3.75%-4% on Wednesday.
- FOMC vote was 10-2, with two members dissenting in favor of a quarter-point hike.
- Inflation remains elevated, with consumer prices up 3.7% year-over-year in September.
- Markets are pricing in a high probability of a December rate hike.
- Economic activity was described as expanding at a strong pace.
The Federal Reserve paused its interest rate hikes on Wednesday, maintaining its benchmark rate between 3.75% and 4%. The decision came despite elevated inflation and strong economic activity. Officials noted robust productivity growth and resilient domestic spending, but kept the door open for future increases to ensure a timely return of inflation to the 2% goal. The FOMC voted 10-2 to hold rates, with two members favoring a 25 basis-point increase. Financial markets largely anticipated the pause, but a significant majority of traders are pricing in a December rate hike.