US makes interest rate decision - as Bank of England verdict looms

The Federal Reserve has left interest rates unchanged - despite persistently high inflation and repeated calls from Donald Trump to lower borrowing costs. 

The US central bank confirmed rates will remain at about 3.9% following a two-day policy meeting - with the announcement coming just days before the midterm elections taking place next week.

Fed chair Kevin Warsh did not confirm if rates would increase later this year - a move many economists are predicting - but insisted that holding rates now would allow for "the accumulation of more information" for future decisions.

Last month, the Fed hiked interest rates for the first time in three years, prompting an angry response from Mr Trump, who said the benchmark rate should be lowered to "1% or less".

The US president told reporters that rates were "too high" and "not appropriate" - adding that "we should be paying the lowest interest rates, because we have the strongest credit".

Despite tensions with the White House, Mr Warsh - speaking at a news conference on Wednesday - insisted "politics played no role" in the decision to keep interest rates unchanged.

US inflation, which rose to 3.7% in September, has accelerated in recent months as the Iran war has caused spikes in oil and gas prices.

It has led to concerns around the high cost of living - including groceries, petrol and housing - becoming a key focus of the upcoming midterm elections.

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Mr Warsh underscored the Fed's aim to bring inflation down to its 2% target, saying: "Energy and related prices have moved higher again in recent weeks.

"Our job is to ensure that relative price changes in some sectors do not broaden out across the economy."

It remains to be seen what impact the Fed's decision to leave interest rates on hold will have on the Bank of England, which meets next month.

In September, the Bank voted to keep rates at 3.75% - but economists are expecting a hike in borrowing costs before the end of the year in an attempt to tackle rising prices.

UK Prime Minister Andy Burnham has previously said that addressing the cost of living crisis is one of his key priorities.

(c) Sky News 2026: US makes interest rate decision - as Bank of England verdict looms