Federal Reserve leaves interest rates unchanged despite elevated inflation

The Federal Reserve kept its key rate unchanged Wednesday at about 3.9% despite elevated inflation, while providing little hint about the central bank’s next moves.

“Inflation remains elevated,” the Fed said in a statement released after its two-day policy meeting. Holding off on an increase will allow “the accumulation of more information” that will help determine what policy the Fed should pursue “to ensure a timely return of inflation” to the central bank’s 2% inflation target, the statement said.

The Fed, led by Chairman Kevin Warsh, raised its benchmark rate last month for the first time in three years, defying President Donald Trump’s demands for rate cuts, in an effort to get inflation back to its 2% target in a “timelier” manner. The Fed is tasked by Congress to combat inflation, and it does so by lifting rates to slow borrowing and spending and cool price increases.

Two Fed officials dissented from Wednesday’s decision, with Fed governor Lisa Cook and Federal Reserve Bank of Cleveland President Beth Hammack voting in favor of hiking rates by a quarter point. Cook has been targeted by the Trump administration, which tried to fire her last year, though the Supreme Court in June ruled she could keep her job while litigation played out. No president has fired a Fed governor before, a sign of the Fed’s longstanding independence from day-to-day politics. Trump renewed his attempt to remove Cook last month by setting up a committee to look into allegations Cook committed mortgage fraud, which she has denied.