The Federal Open Market Committee voted 10-2 on October 28 to keep the federal funds rate unchanged in the 3.75%-4% range. Two officials dissented, favoring a quarter-point hike to address inflation that remains elevated after more than five years above the 2% target.

In its post-meeting statement, the Fed noted that economic activity is expanding at a strong pace with resilient domestic spending. It emphasized that the accumulation of more information will guide the appropriate policy stance to return inflation to the 2% goal.

Recent data showed the consumer price index rising 3.7% year-over-year in September. Energy prices contributed significantly amid geopolitical tensions, while broader price pressures appeared in goods and services.

Markets now price in a high probability of a rate increase at the December 8-9 meeting. Fed officials including Cleveland President Beth Hammack and Richmond President Thomas Barkin have recently advocated for gradual further tightening to prevent an inflationary mindset from taking hold.

The decision came just before the November midterm elections. Policymakers have stressed their commitment to price stability without unnecessary disruption to growth or employment.