Fed holds rates at 3.75% to 4% in a 10-2 vote, with two officials favoring a hike

The Federal Reserve kept its benchmark federal funds rate in a range of 3.75% to 4% on Wednesday, with two of 12 voters dissenting in favor of a 0.25 percentage point increase. Governor Lisa Cook and Cleveland Fed President Beth Hammack cast the dissenting votes. In its statement, the Federal Open Market Committee said economic activity was expanding at a strong pace and that inflation "remains elevated," adding that more information would help it decide the policy stance needed to return inflation to its 2% goal. The Fed also kept the interest rate it pays on bank reserves at 3.90% and its primary credit rate at 4%. At his news conference, Chair Kevin Warsh said that in 2027 one of the Fed's eight meetings would focus only on long-term policy strategy, with no rate vote or policy statement expected.

Why it matters: The federal funds rate feeds into what banks charge on credit cards, home equity lines and other variable-rate loans, and into what they pay on savings accounts.