The Federal Reserve, the US central bank, decided yesterday to keep interest rates in the 3.75% to 4% range, as markets expected. But the decision was not unanimous: according to the Fed's statement, the vote was 10-2, and the two dissenters, Lisa Cook and Beth Hammack, preferred to raise rates by a quarter point.
"Inflation remains elevated"
The statement released after the meeting said inflation "remains elevated" and that economic activity is expanding "at a strong pace", stronger wording than in September. Fed Chair Kevin Warsh said politics played "no role" in the decision, which came about a week before the US midterm elections. Market estimates put a high probability on a hike at the next meeting, on December 9.
Why it matters for tech
High rates hit technology companies especially hard. They lower the value of future profits, which most growth companies depend on, and make the money companies borrow to fund their huge AI investments more expensive. The decision came on the same evening Microsoft and Google showed tens of billions of dollars of quarterly infrastructure spending.
And Israeli tech
High US rates also make life harder for Israeli startups, which raise mainly from American funds. When money is expensive, investors are more selective and tend to favor companies with clear revenue. At the same time, fields such as cybersecurity and AI keep attracting huge sums even in the current rate environment.
