The Federal Reserve kept interest rates unchanged Wednesday despite rising inflation that could have justified a rate hike.There were questions about how the Federal Reserve Board would vote after a recent increase in consumer i nflation. Chair Kevin Warsh presided over the meeting for the second time since taking over in May from Jerome Powell, who remains a member of the Federal Reserve Board.Warsh had criticized Powell for keeping interest rates too high after inflation eased in 2024 and 2025.The Federal Reserve has long maintained a dual mandate: keeping inflation in check while supporting strong employment. The Feds inflation target is 2%. When inflation rises above that level, the board has often responded by increasing interest rates.Currently, the inflation rate stands at 3.5%. It has gone up since the start of the year largely due to a spike in energy prices likely caused by the U.S. conflict in Iran."Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East," The Federal Reserve said. "Productivity growth and capital investment are strong. Job gains have kept pace with the workforce, and the unemployment rate has changed little. Inflation remains elevated relative to the Committee's 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy. The Committee will deliver price stability."Three of the 12 voting members of the board voted to increase interest rates by 0.25%.The federal funds rate set by the board can have a significant, though indirect, effect on consumers. The rate can influence mortgage rates and borrowing costs for purchases such as cars.The average rate for a 30-year fixed mortgage was 6.58% as of Wednesday, down from 6.74% a year earlier. ...read more read less