US Federal Reserve holds rates at 3.75–4%

The US Federal Reserve has kept its rate in the 3.75–4% range. The decision was not unanimous: two committee members voted for a 0.25-point rise. Fed chair Kevin Warsh said monetary policy is “starting to work”; markets expect a rise in December.

The Fed acknowledges that inflation remains high, at 3.7% in October, but says the US labour market is solid and the economy is growing. In September it raised rates for the first time in three years, and the market consensus puts the chance of another rise in December at about 90%. The decision came six days before the 3 November midterm elections.

For Costa Blanca residents, Fed decisions affect the dollar exchange rate, and so the prices of imports and the income of anyone paid in dollars. Mortgage rates in Spain depend on the European Central Bank and Euribor, not directly on the Fed.