Fed expected to hold interest rates steady as inflation tops midterm voters concerns

The Federal Reserve is meeting in Washington this week, where it will consider whether to raise interest rates in an effort to tamp down on inflation.The meetings come at a moment when rising prices are shaping large parts of the U.S.

economy and inflation is set to play a key role in Tuesday’s midterm elections.Yet members of the bank’s interest-rate setting committee are widely expected to keep benchmark rates steady this month.There are several reasons why the Fed is unlikely to move on rates Wednesday.

But most of them come down to a sense among top officials that the central bank shouldn’t rush into interest rate decisions — and that it definitely shouldn’t do so less than a week out from Election Day.“Inflation remains above our goal,” Michelle Bowman, the Fed’s vice chair for supervision, said Oct.

14.“We have some time to wait and see how financial conditions evolve before we take more action.”The Fed last raised rates by a quarter of a percentage point in September, after a string of monthly inflation readings well above its target of 2% and no signs that prices were coming down anytime soon.“The plain fact is that inflation is too high and has been for too long,” Federal Reserve Chair Kevin Warsh said at the time.Inflation figures for the month of September, released earlier this month, underscored Warsh’s point, with the annual inflation rate rising to 3.7% from 3.4% the previous month.Some analysts believe Warsh and the Fed will be taking a risk if they vote to hold rates steady, given the trajectory of inflation.“The case for skipping [a rate hike in] October is not terribly compelling,” wrote analysts at Deutsche Bank.Fed officials, however, point to a core tenet of the dual mandate that Congress has assigned to the Fed, of promoting maximum employment while maintaining stable prices.

Specifically, the “stable” part, which underpins the Fed’s famously slow and deliberative approach.“I don’t feel urgent that �...