US midterm results put Fed policy under scrutiny as investors revisit 2025 rate cuts

The US midterm elections could reshape political pressure on the Federal Reserve, raising questions about whether policymakers will maintain their hawkish stance.
The Fed cut interest rates three times in 2025 under Jerome Powell, despite inflation remaining above its 2% target. This year, policymakers have adopted a more restrictive approach as price pressures persist.
The contrast has drawn attention to officials who supported easing last year but have since favored holding rates steady or raising them.
Democrats' gains in Congress could also increase scrutiny of Fed Chair Kevin Warsh and strengthen congressional oversight of monetary policy appointments.
However, a shift toward lower rates is far from certain. Inflation remains elevated, and several Fed officials continue to argue that tighter policy is necessary to restore price stability.
Investors will be watching upcoming FOMC decisions for signs of a change in policy direction, particularly as the political landscape in Washington shifts.
Source: Federal Reserve, Reuters (November 2026)