Fed holds US rates at about 3.9% as Bank of England decision looms

The US central bank has left interest rates at about 3.9% after a two-day policy meeting. The decision came days before next week’s midterm elections.

Fed chair Kevin Warsh did not confirm whether rates would rise later this year. Many economists are predicting an increase. Warsh said holding rates now would allow for “the accumulation of more information” for future decisions.

Warsh keeps focus on inflation

Last month, the Fed raised interest rates for the first time in three years. The move drew an angry response from President Donald Trump, who said the benchmark rate should be lowered to “1% or less”.

Trump told reporters rates were “too high” and “not appropriate”. He added: “we should be paying the lowest interest rates, because we have the strongest credit”.

Warsh underlined the Fed’s aim to bring inflation down to its 2% target. He said: “Energy and related prices have moved higher again in recent weeks. Our job is to ensure that relative price changes in some sectors do not broaden out across the economy.”

Bank of England under pressure

The impact of the Fed decision to leave interest rates on hold on the Bank of England is still unclear. The BoE meets next month. In September, it voted to keep rates at 3.75%. Economists expect a hike in borrowing costs before the end of the year as policymakers try to tackle rising prices.

UK Prime Minister Andy Burnham has previously said addressing the cost of living crisis is one of his key priorities.