The Federal Reserve kept its benchmark interest rate unchanged at 3.75%-4% at its October 28 meeting, but two officials supported a 25-basis-point increase. The 10-2 vote highlighted differences within the Federal Open Market Committee (FOMC) as policymakers continue to face persistent inflation and uncertainty over the next rate decision.
Lisa Cook and Beth Hammack Back a Rate Hike
Federal Reserve Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented from the decision, favouring a 0.25-percentage-point increase. The remaining 10 members supported holding rates steady.
Fed Chair Warsh said inflation remained too high and that price stability had been the main focus of discussions during the two-day meeting. He pointed to renewed increases in energy prices and said the central bank needed to prevent price pressures in individual sectors from spreading across the broader economy.
However, Warsh did not commit to a rate increase at the December meeting. He said incoming economic data would help officials assess the appropriate policy stance and reiterated that he would not provide forward guidance or predict the outcome of future decisions.
Inflation and Economic Growth Remain in Focus
The September Consumer Price Index (CPI) rose at its fastest pace in five months, with higher energy prices linked to the Iran war contributing to the increase. The report also indicated broader inflationary pressures across goods and services.
Economic activity, meanwhile, remained resilient. Warsh said first-half GDP growth had been revised upward from 1.8% to 2.4%, while consumer spending and business investment continued to support expansion. Third-quarter GDP growth was expected to be around 3.2% at an annualised rate.
The Fed also observed some tightening in financial and credit conditions since its September rate increase. Warsh said market participants had become more selective in allocating capital, although he stopped short of describing overall financial conditions as restrictive.
Fed Announces Changes to Meeting Schedule
The Federal Reserve also outlined plans to change its policy meeting format from 2027. Under the proposed schedule, one meeting in 2027 will focus on longer-term monetary policy strategy without an interest-rate vote or policy statement. In 2028, two such strategy meetings are planned, reducing the number of policy-setting meetings accordingly to six.
The Fed said upcoming economic data would help guide its next decision. The September Personal Consumption Expenditures (PCE) price index was scheduled for release on Thursday, October 29.
Meanwhile, Bitcoin briefly rebounded before retreating, according to the supplied market report. The report linked the move to uncertainty over the Fed’s policy outlook and expectations of interest rates remaining elevated.
Q1. What interest rate did the Federal Reserve maintain in October 2026?
The Federal Reserve maintained its benchmark federal funds rate target range at 3.75%-4% on October 28, 2026.
Q2. Who voted for a rate hike at the October 2026 Fed meeting?
Federal Reserve Governor Lisa Cook and Cleveland Fed President Beth Hammack supported a 25-basis-point rate increase.
Q3. Why did the Federal Reserve keep interest rates unchanged?
The Fed chose to wait for additional economic information to assess the appropriate policy stance. Officials continued to focus on bringing inflation back towards the 2% target.
Q4. Did the Fed confirm a rate hike in December 2026?
No. Fed Chair Warsh declined to predict the outcome of the December meeting.
Q5. What changes will the Federal Reserve make to its meeting schedule?
In 2027, one meeting will focus on monetary policy strategy without an interest-rate vote or policy statement. In 2028, two strategy meetings are planned, leaving six policy-setting meetings.
