The Federal Reserve is meeting in Washington this week, when it will consider whether to raise interest rates in an effort to tamp down on inflation.
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it → meet → inflation
The meetings come at a moment when rising prices are shaping large parts of the U.S. economy and inflation is set to play a key role in next Tuesday’s midterm elections.
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inflation → come → elections
Yet members of the bank’s interest rate-setting committee are widely expected to keep benchmark rates steady this month.
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members → set → rates
There are several reasons the Fed is unlikely to move on rates Wednesday.
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Fed → be → rates
Most of them come down to a sense among top officials that the central bank shouldn’t rush into interest rate decisions — and that it definitely shouldn’t do so less than a week out from Election Day.
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it → come → Day
“Inflation remains above our goal,” Michelle Bowman, the Fed’s vice chair for supervision, said Oct. 14.
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Bowman → remain → supervision
“We have some time to wait and see how financial conditions evolve before we take more action.”
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we → have → action
The Fed last raised rates by a quarter of a percentage point in September after a string of monthly inflation readings well above its target of 2% and no signs that prices were coming down anytime soon.
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prices → raise → %
“The plain fact is that inflation is too high and has been for too long,” Federal Reserve Chair Kevin Warsh said at the time.
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Warsh → say → time
Inflation figures for September, released this month, underscored Warsh’s point, with the annual inflation rate rising to 3.7% from 3.4% the previous month.
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rate → release → %
Some analysts believe Warsh and the Fed will be taking a risk if they vote to hold rates steady, given the trajectory of inflation.
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they → believe → inflation
“The case for skipping [a rate hike in] October is not terribly compelling,” analysts at Deutsche Bank wrote.
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analysts → skip → Bank
Fed officials, however, point to a core tenet of the dual mandate that Congress has assigned to the Fed, of promoting maximum employment while maintaining stable prices.
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Congress → point → prices
Specifically the “stable” part, which underpins the Fed’s famously slow and deliberative approach.
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which → underpin → approach
“I don’t feel urgent that we have to decide with a limited set of information,” San Francisco Fed President Mary Daly said in a recent interview.
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Daly → feel → interview
“I think we have the time that we need.”
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we → think → that
Another guiding principle at the Fed that is most likely tipping expectations about Wednesday is its tradition of staying far away from politics.
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that → guide → politics
If the Fed were to raise rates just days before the midterms, it could, at best, risk looking like a politically motivated decision.
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it → raise → decision
At worst, it could influence people’s votes.
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it → influence → votes
“We could imagine that all else equal the Fed might prefer to stay out of the headlines for raising rates just ahead of a midterm election where affordability is the principal concern,” the Deutsche Bank analysts wrote.
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analysts → imagine → election
Voters have repeatedly told pollsters that rising prices, especially in the housing and energy sectors, are their primary concerns as they cast their ballots.
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they → tell → ballots
With control of both the House and the Senate on the line in Tuesday’s election, voters are clear about whom they blame for the higher prices: President Donald Trump’s war in Iran and his global tariff regime.
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they → blame → Iran
The most recent NBC News poll found Trump’s approval rating at 27% for his handling of the cost of living and just 29% for his handling of the war with Iran.
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poll → find → Iran
Two-thirds of Americans said the soaring gas prices triggered by Trump’s Iran war were either a “very serious” or a “somewhat serious” problem.
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prices → say → war
Likewise, more than half of respondents said current economic conditions had caused them to change what kinds of groceries they buy.
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they → say → groceries
All that adds up to a very difficult political environment for Trump’s fellow Republicans, who are struggling to balance their general support for him with how unpopular his policies have become with voters.
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policies → add → voters
Even the Trump administration, which normally maintains an upbeat view about the economy and inflation, sounded concerned after the most recent inflation reading earlier in the month.
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which → maintain → month
“This was a disappointing number,” said Kevin Hassett, director of the White House National Economic Council.
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Hassett → say → Council
Asked by Fox Business hosts why voters had such negative views of the current economy despite higher spending, Hassett was unsure.
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Hassett → ask → spending
“It’s a puzzle that we’re noodling about every day,” he said.
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he → ’ → that
The Aporia
