US Fed holds rates at 3.75-4% in split vote; two officials wanted a hike
Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented. Markets still expect a rate rise in December as US inflation runs at 3.7%.
The US Federal Reserve kept its benchmark interest rate in a range of 3.75% to 4% at its meeting on Wednesday, October 28, after raising it by a quarter point in September.
The vote was 10 to 2. Fed Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented, both preferring another quarter-point increase. September's decision had been unanimous.
What the Fed said
The policy statement upgraded the Fed's view of the US economy from growing at a "solid" pace to a "strong" one. It dropped language saying policy "will support" a return to 2% inflation, saying instead that "the accumulation of more information will help" the committee decide its next step.
Chairman Kevin Warsh said politics played "no role" in the decision, which came a week before the US midterm elections.
Inflation
US consumer prices rose 3.7% in the year to September, and core inflation was 2.6%, hotter than expected. Before the meeting, traders priced about an 84% chance of a rate hike in December.
The Bank of Canada raised its own policy rate by a quarter point to 2.5% on the same day.
Why it matters for India
Higher US rates tend to draw money out of emerging markets. Foreign investors have been net sellers of Indian shares, and the rupee is trading near 95 to the dollar.
Sources
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