America's central bank did not change its main interest rate this week. The rate stays between 3.75% and 4%. But not everyone agreed. Two of the 12 people who vote wanted to raise it.
The news in one line
The US central bank is called the Federal Reserve, or the Fed. On 28 October, it voted 10 to 2 to keep its rate the same. Its own note says prices are still rising too fast. It wants to see more data before it acts.
What is this rate?
It is the rate banks charge each other for short loans. When it goes up, loans for people also cost more. That includes credit cards and car loans.
So "no change" means loans did not get cheaper. But they did not get more costly either. At least, not yet.
Who said no, and why?
Lisa Cook and Beth Hammack voted no. Both are top Fed members. They wanted to raise the rate by a small step of 0.25%.
Why? Prices are still going up fast. A higher rate can slow that down. Hammack also voted for a rise back in July.
What is different from last time?
- In September, the Fed raised the rate. This time, it waited.
- In September, it said the US economy was doing well. Now it says the economy is strong.
- In July, one member wanted a rise. This time, two did.
Put simply, the Fed thinks America can cope with a higher rate. And prices are still too high. That is why many experts now expect a rise in December. Traders put the chance at about 85%, says the CME FedWatch tool.
What did the Fed boss say?
The head of the Fed is Kevin Warsh. He said prices can come down to the Fed's goal of 2% a year. And he said this can happen without hurting jobs.
He also made a change. The Fed meets eight times a year to set its rate. From next year, one of those meetings will be for big long-term plans, not for the rate. In 2028, two will be.
Why should people outside America care?
The Fed's choices travel around the world. When US rates are high, money tends to flow to America. That can pull money away from places like India.
So the pause was good news for Indian shares. On Thursday morning, the Nifty 50 rose 0.54%. The Sensex rose 0.61%, Reuters reported. The US dollar also slipped a little.
New to this? Read how central banks move interest rates. To see how rising prices are measured, read the shopping basket behind every inflation number.
What to watch next
- New US figures on prices and spending, due on 29 October.
- Europe's and Japan's central banks, which decide this week. Both are expected to wait.
- The Fed's next meeting in December, where a rise now looks likely.
Other central banks moved too. Canada raised its rate for the first time in over three years. New Zealand kept its rate at 2.75%, which surprised most experts.
