Popular Economics Weekly
“The Committee decided to maintain the target range for the federal funds rate at 3-3/4 to 4 percent, in support of the Federal Reserve’s dual mandate. The Committee is continuing its policy of maintaining ample reserves in the banking system.” FOMC
The Fed’s October Federal Open Market Committee meeting resulted in no change in its Fed Funds rate of 3.75-4.0%.
Why are they holding their rate when the higher tariffs and Iran war behind the inflation surge have no end in sight? Wouldn’t it have been better to raise interest rates, their main inflation fighter now, to maintain credibility?
They may have to accept inflation for the moment because there is little chance of taming it when they can’t control rising prices from so many factors, such as the tariffs and Iran war energy shortages driving it.
Or, they may be more concerned the U.S. economy is on a short fuse from President Trump’s irrational policies that are damaging economic growth. Why raise tariffs on Canadian steel, aluminum, lumber and electricity, our main trading partner that are so important to American businesses, for instance?
The Fed’s key may be they are “maintaining ample reserves,” to do what,” lower their rates later and pump more money into the economy because of the danger of recession?
The FOMC is saying likes our current economy and wants to keep it growing:
“While uncertainty remains elevated owing, in part, to geopolitical developments, domestic spending has been resilient. Productivity growth is strong, and capital investment is robust. Job gains have kept pace with the workforce, and the unemployment rate has changed little”
So don’t rock the boat just yet? Maybe it’s wise, but if the Fed allows higher interest rates and inflation to become embedded, it affects future growth decisions of industries and consumers (slower).
And wartime spending is going through the roof, as is the A.I. investment frenzy, which is raising our federal government’s annual interest payments above $1trillion. How much more can we afford?
And will we ever see a Fed 2% inflation target rate again?
Harlan Green © 2026
Follow Harlan Green on Twitter: https://x.com/HGreen97180/
