‘Politics played no role’: Fed hits pause button ahead of midterms

October 29, 2026 — 12:04pm

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If the US Federal Reserve Board had met a day or two later, would it have left interest rates on hold?

In explaining why the Fed kept its policy rate, the federal funds rate, unchanged after this week’s meeting of its Open Market Committee (FOMC), the central bank said it needed more data. “The accumulation of more information will help the committee determine the policy stance appropriate to ensure a timely return of inflation to the committee’s 2 per cent goal,” it explained.

More information will become available with the release of the Personal Consumption Expenditures (PCE) report for September on Thursday at 11.30pm AEDT, along with GDP data. The PCE price index is the Fed’s preferred measure of inflation.

It would be a surprise if that data doesn’t show US inflation continuing to accelerate, given the most recent consumer price index report for September revealed a 0.6 per cent rise in the headline inflation rate, with price increases both gathering pace and broadening throughout the economy.

In the circumstances, a central bank committed to bringing inflation under control could have justified increasing its policy rate for the second time in this cycle. Indeed, two of the 12 voting members of the FOMC – Lisa Cook and Beth Hammack – voted for a 25 basis point increase.

The Fed’s chairman Kevin Warsh was asked at the press conference after the meeting why, if inflation was high, the bank hadn’t raised rates. He didn’t provide a direct answer.

‘I just spent two days with my colleagues upstairs. I didn’t hear an utterance about politics... I didn’t hear anything about it and I don’t believe it had any role in the........

© The Age