The Federal Reserve holds interest rates steady at 3.75 to 4 percent, with two officials voting to raise them

The Federal Reserve stopped after one step. A month after raising its benchmark rate for the first time in three years, the central bank voted on Wednesday to leave the federal funds rate where it stands, at 3.75 to 4 percent, and to wait for more data before deciding whether inflation needs another push down.

The vote was 10 to 2. Lisa Cook and Beth Hammack wanted a quarter point increase now. The statement the committee issued kept the language plain. Economic activity is expanding at a strong pace, domestic spending has been resilient, job gains have kept pace with the workforce, and the unemployment rate has changed little. Then the sentence the whole document turns on: “Inflation remains elevated.” The committee said the information still coming in will help it settle the stance needed to return inflation to 2 percent, and it closed with a promise. “The Committee will deliver price stability.”

Warsh refused to say what comes in December. “The period right in front of us is information rich. There is a lot happening in the world. My colleagues and I are keen to take notice of it,” he told reporters. He said growth in the first half of the year was revised up to 2.4 percent from 1.8 percent, that the third quarter looks stronger still at likely above 3 percent, and that financial conditions have tightened a bit since the September increase, which he read as policy working. He said politics played no role in the decision. The meeting was the last one before the November 3 midterm elections, and the war in Iran sits behind much of the inflation the committee is fighting. Fuel prices climbed this year as the war disrupted energy markets, and September inflation of 3.7 percent was the fastest reading in five months. The labor market gives the Fed room to wait. Employers added only 29,000 jobs in September and unemployment ticked up to 4.2 percent, while weekly jobless claims remain near record lows.

Stocks edged higher after the decision. The Dow Jones Industrial Average rose 0.19 percent, the S and P 500 gained 0.28 percent and the Nasdaq Composite added 0.27 percent in Wednesday trading, as of October 28. Traders came out of the meeting more confident that a December increase is coming. Market readings put the odds of a quarter point hike at the final meeting of the year at roughly four in five.

Warsh also used the day to change how the Fed itself works. Starting in 2027, one of the eight meetings held each year will be given over entirely to broad monetary policy strategy, with no vote on interest rates, and two meetings will drop the vote in 2028. Warsh argues that fewer votes give policymakers more time to gather data between decisions. Critics answer that a central bank that votes less often also reacts more slowly when conditions turn.