US Fed Holds Rates Steady at 3.75%–4% in October, With Two Officials Voting for a Hike

The United States Federal Reserve has left its benchmark interest rate unchanged, holding the target range for the federal funds rate at 3.75% to 4% after its two-day meeting on 28 October 2026. The decision, announced at 2:00 p.m. Eastern Time, pauses the tightening cycle just one meeting after the central bank raised rates in September for the first time in three years.

The pause was not unanimous. The Federal Open Market Committee (FOMC), the Fed's rate-setting panel, approved the hold by a 10–2 vote. Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented, preferring to lift the target range by a quarter of a percentage point, to 4% to 4.25%, at this meeting.

What the Fed actually said

In its short post-meeting statement, the Committee said it had decided to maintain the target range in support of the Fed's dual mandate of maximum employment and stable prices, and that it would continue its policy of maintaining ample reserves in the banking system.

On the economy, the statement struck a firmer tone than in September, upgrading its description of activity to expanding at a strong pace. It pointed to resilient domestic spending, strong productivity growth and robust capital investment, while noting that uncertainty remains elevated, in part because of geopolitical developments. Job gains, it said, have kept pace with growth in the workforce, and the unemployment rate has changed little.

On prices, the message was blunt: inflation remains elevated. The Committee said gathering more information would help it judge the policy stance needed to bring inflation back to its 2% goal in a timely way, and it restated its commitment to delivering price stability.

Why a hold, when inflation is still high?

The decision comes against an uncomfortable backdrop for the Fed. Consumer prices rose 3.7% over the year to September, picking up from the previous month, and producer prices have risen sharply too — both well above the 2% target the Fed aims for over the longer run.

September's quarter-point increase, which took the range to its current 3.75%–4%, was itself the first rise since 2023, and the Fed is still watching how that tightening feeds through to households and businesses. At his press conference, Chair Kevin Warsh said the Fed had started to see some tightening in financial and credit conditions for some businesses and households, a factor in keeping rates steady for now.

The timing added to the scrutiny. The decision landed six days before US midterm elections on 3 November, in a campaign dominated by the cost of living. Warsh was asked directly whether politics had influenced the call. He said it had not, telling reporters he had heard no mention of politics during two days of meetings with his colleagues.

What Warsh signalled — and did not signal — about December

For markets, the biggest question going into the meeting was December, and the statement itself gave no direct answer. It contains no commitment about the next meeting, and Warsh's press conference offered little in the way of a clear steer either: the emphasis, again, was on waiting for more information before judging the right stance.

That silence does not mean a December move is off the table. Officials' projections in September had pointed to another increase before the end of the year, and futures markets were pricing a high probability of a quarter-point rise in December after the October hold — market pricing, not a promise from the Fed. Fresh inflation data due in the days after the meeting, including the Fed's preferred personal consumption expenditures measure, will shape that debate.

Warsh did announce one longer-term change at the press conference: the FOMC's meeting calendar will change in stages from 2027. The Committee will still meet eight times in 2027, but one of those meetings will become a strategy-only session with no rate vote, rising to two such sessions in 2028 — leaving six rate decisions a year from 2028.

Why this matters beyond the United States

US interest rates set a reference point for borrowing costs around the world. When the Fed holds rates high, it tends to keep the dollar supported and borrowing more expensive, which matters for emerging economies, for companies that borrow in dollars, and for anyone watching mortgage, loan and credit-card rates. A hold, rather than another rise, at least avoids adding to that pressure for now — but with two policymakers already voting for higher rates and inflation still elevated, the direction of travel is not yet settled.

The next test comes with the incoming data. If inflation cools, the case for staying on hold strengthens. If it stays hot, the dissenters' argument for another rise will get louder, and December will become the meeting to watch.

Disclaimer: This article is for general information only and is not investment, financial or trading advice. Interest-rate decisions and market expectations can change quickly; readers should verify figures with official sources and seek professional advice before making financial decisions.