Election 2026: The Politics of Interest Rates

With the midterm elections coming into focus, you may start hearing plenty of predictions about what the Federal Reserve will (or won’t) do with interest rates.

The Fed’s next scheduled meeting is October 27–28, and one question you may hear is whether the Fed will make a move so close to an election.

There’s a common belief that the Fed avoids changing interest rates right before an election. But that’s more of a myth than a rule.

For example, ahead of the 2024 election, then-Fed Chair Jerome Powell oversaw a 0.50 percentage-point rate cut in September. The Fed said its decision reflected its assessment of inflation, employment, and the broader economic outlook, not the election calendar.

What Does a Rate Change Mean for You?

A better question than “what will the Fed do next?” may be: “how long does it take for a Fed rate change to affect daily life?”

The answer depends on what you're looking at. Mortgage rates, for example, don't necessarily move immediately after a Fed decision. Other borrowing and savings rates can respond differently, too. Credit cards, loans, savings accounts and investments can all be affected by changing interest rates, but the timing and impact vary.

Don't Let the Next Fed Meeting Drive Your Financial Plan

With so much attention on interest rates and the election, it can be tempting to make financial decisions based on what you think the Fed will do next.

But one Fed meeting doesn't change your long-term financial goals. A good financial plan is built to account for changing economic conditions, market fluctuations and interest-rate cycles. Rather than reacting to every headline, your strategy should be reviewed and adjusted when your circumstances or long-term goals change. Our strategy is designed to anticipate changes along the way, NOTreact to every headline.

So, if the Fed’s next meeting is giving you a little heartburn, don't panic. And if your stomach keeps tossing and turning, give us a call before you reach for the antacid.

^{1. CMEGroup.com, September 9, 2026}

^{2. AAII.com, September 28, 2026}

Frequently Asked Questions

Does the election affect Federal Reserve interest-rate decisions?
The Federal Reserve is designed to make monetary policy independently of political considerations. Its interest-rate decisions are based on economic conditions, including inflation, employment and the broader economic outlook—not the election calendar.

Does the Fed avoid changing interest rates before an election?
No. There is no formal rule preventing the Fed from changing rates before an election. In fact, the Fed has made rate changes during election years. In September 2024, for example, the Fed cut its target federal funds rate by 0.50 percentage point, ahead of the November presidential election.

How long does it take for a Fed rate change to affect mortgage rates?
It depends. Mortgage rates aren't directly set by the Federal Reserve. They're influenced by longer-term interest rates, inflation expectations, economic conditions and investor demand. As a result, mortgage rates can move before or after a Fed decision and don't necessarily change by the same amount.

How do Federal Reserve rate changes affect investors?
Changes in interest rates can influence borrowing costs, consumer spending, business investment and the attractiveness of different types of investments. However, the effect varies across investments and economic conditions. That's one reason it's generally difficult to build a long-term investment strategy around predicting individual Fed decisions.

Should I change my investment strategy based on the Fed's next rate decision?
A single Fed decision generally shouldn't determine a long-term investment strategy. Your investment approach should reflect factors such as your goals, time horizon, risk tolerance and overall financial situation. Interest-rate changes are one of many factors to consider.

How can a financial plan prepare for changing interest rates?
A well-designed financial plan can account for different economic and interest-rate environments. Regular reviews can help determine whether changes in your income, spending, investments, borrowing or goals call for adjustments to your plan. The goal isn't to predict every rate change, but to make sure your strategy remains aligned with your circumstances.