EL7.AI
Central BanksMedium•28 October 2026•
4 min read

Fed Holds Rates at 3.75% to 4.00% in 10-2 Vote

Key Facts

1The Fed kept its target range at 3.75% to 4.00% on October 28, in a 10-2 vote.
2Lisa Cook and Beth Hammack preferred a quarter-percentage-point increase in the range at the October meeting.
3Durable goods orders rose 1.8% in September, versus a 1.9% forecast and a revised August reading of 0.1%.
4An Associated Press report forecast September annual inflation of 3.6% for the headline index and 3.1% for core inflation.
5The advance estimate of third-quarter gross domestic product and personal income and spending data are due on October 29 at 8:30 a.m. Eastern Time.

On October 28, 2026, the Federal Reserve kept its target range for the federal funds rate at 3.75% to 4.00%, in a 10-2 vote. The committee said in its statement that it had decided to maintain the range, while Lisa D. Cook and Beth M. Hammack preferred a quarter-percentage-point increase at this meeting. The dissent put the option of tighter policy under discussion within the committee, but concerned the October decision itself. The hold followed the Fed’s quarter-point rate increase at its previous meeting on September 16, the first pause after that increase. The September decision had the unanimous support of all twelve members, compared with October’s split vote.

The Fed described economic activity as expanding at a “solid pace” and said domestic spending remained resilient and capital investment was strong. It added that productivity growth was strong, while also noting that inflation remained elevated. The statement said uncertainty remained elevated, partly because of geopolitical developments. This assessment places resilient spending and investment alongside ongoing price pressures in the committee’s reading of the economy. The Fed said gathering more information would help it determine the appropriate stance of monetary policy to ensure inflation returns to its 2% target in a timely manner.

September labor market data showed a modest increase of 29,000 in nonfarm payrolls, while the unemployment rate stood at 4.2%. The Bureau of Labor Statistics said both measures “changed little” during the month. This reading is among the data describing labor conditions in the period before the October decision. On the spending side, durable goods orders rose 1.8% in September, following a revised 0.1% increase in August. The initial August reading was negative at -0.1% before revision. September’s increase came in below the 1.9% forecast in the data table published on October 27.

Attention is turning to September inflation data after the Associated Press forecast before the decision that the personal consumption expenditures price index would rise 3.6% year over year, compared with a 3.4% increase in August. The agency estimated that core inflation, which excludes food and energy, would be 3.1% in September, versus 3% in the previous month. These forecasts put the path of prices at the center of attention following the hold, as the Fed said inflation remained elevated and its target was 2%. In bond market data before the announcement, the yield on the 10-year U.S. Treasury stood at 4.99%, down from 5.00% at the previous close. This was a snapshot before the decision, not a measure of the market’s move after its release.

Investors, according to a Reuters report before the meeting, expected rates to remain unchanged after September’s increase, while watching the December meeting as a possible occasion for another hike. The Fed’s next meeting is scheduled for December 8 and 9, 2026. In July, three members dissented from the decision to hold rates, preferring a quarter-point increase in the range; two of them, Hammack and Lorie Logan, were among the dissenters in October. The July vote was 9-3, while October’s dissent was limited to Cook and Hammack. These successive decisions provide context for the disagreement over the level of tightening, with the December decision remaining the next monetary policy meeting.

The U.S. Bureau of Economic Analysis is scheduled to release its advance estimate of third-quarter gross domestic product, along with September personal income and spending data, on October 29 at 8:30 a.m. Eastern Time. The income and spending data include the personal consumption expenditures price index monitored by the Fed. These releases come the day after the committee’s decision, adding data on growth, spending and prices to the information the central bank said it would use to determine the appropriate stance of monetary policy. The actual September inflation reading will also test the forecasts made before the announcement for both the headline and core indexes. The committee’s December 8 and 9 meeting follows these data as its next scheduled meeting.