Fed Pauses Interest Rate Hikes for Now as Key Midterm Elections Loom

Federal Reserve policymakers have put interest rate hikes on pause for now, as they wait to assess further data on inflation and the strength of the economy.Fed Chairman Kevin Warsh joined the 10-2 majority on the Federal Open Market Committee on Wednesday, voting to leave the federal funds rate unchanged at its current range of 3.75% to 4.00%.Last month, the FOMC voted to raise rates for the first time in three years in an effort to clamp down on inflation. But now, with the crucial midterm elections less than a week away, a pause allows the Fed to avoid making political waves as voters head to the polls.Nevertheless, more rate hikes appear to be on the horizon. Investors now expect the Fed to raise rates by a quarter-point in December, and at least once again in the first quarter of 2027.Mortgage rates, which briefly dipped below 6% in late February, have marched steadily higher this year, fueled by the same inflation concerns that prompted the Fed to take action. Last week, mortgage rates averaged 7.32%, according to Freddie Mac.The Fed uses higher interest rates to fight inflation, and lower rates to stimulate the job market, in line with the central bank's dual mandate of main...