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

U.S. Interest Rate Range Holds at 3.75%–4% After Fed Decision; Goldman Sees December Hike

Key Facts

1The Fed kept the interest rate range at 3.75%–4% on October 28 in a 10-to-2 vote.
2Lisa Cook and Beth Hammack preferred a 1/4 percentage-point rate increase at the October meeting.
3Goldman Sachs expected rates to hold in October and then rise in December.
4Traders priced the probability of a December rate increase at 83% on October 28.

The Federal Reserve kept its target interest rate range at 3.75%–4% at its meeting on October 28, but left the door open to further tightening as inflation remains elevated. The decision passed by 10 votes to 2, signaling disagreement within the committee over the appropriate move at the meeting. Goldman Sachs said it expects rates to hold at the October meeting and then rise again in December, citing what it described as participants’ agreement on hikes at alternating meetings. That is not a decision by the Fed, as the policy path depends on the committee’s assessment of incoming data. The central bank described economic activity as expanding at a strong pace, but said inflation remains elevated and that gathering more information would help the committee determine the appropriate policy stance.

Lisa Cook and Beth Hammack were the two members who dissented from the hold, preferring to raise the target range by 1/4 percentage point at the October meeting. Their dissent puts the option of tightening before the committee, but does not change the vote’s outcome, which left rates unchanged. President Donald Trump, meanwhile, criticized the rate increase and called for a cut, according to the correction to the information about his position; the members’ votes therefore do not reflect a preference for the hold Trump called for. The Fed said inflation remains elevated, a backdrop consistent with continued debate over the risks of keeping policy more accommodative. Goldman’s December outlook is also based on a scenario of alternating meetings, not an announcement that the next increase has been decided.

Price data present policymakers with a mixed picture: the consumer price index rose 0.6% in September, after a 0.4% increase in August, bringing the annual increase to 3.7% in the 12 months through September. The core index, which excludes food and energy, rose 0.3% in September, the same monthly rate recorded in August, while its annual increase was 2.6%. On the activity side, real gross domestic product grew at an annual rate of 2.2% in the second quarter, following growth of 2.5% in the first quarter. The core personal consumption expenditures price index, an inflation measure, rose at an annual rate of 3.3% in the second quarter. These readings provide context for the Fed’s statement that inflation remains elevated, while assessing the activity outlook requires waiting for the third-quarter estimate.

Durable goods orders showed monthly strength in September, rising 1.8% to $345.4 billion after a 0.1% increase in August, led by transportation equipment. The Atlanta Federal Reserve’s GDPNow model also estimated real GDP growth in the third quarter at 3.3%; this is a nowcast of quarterly growth, not realized growth in September or an official Fed forecast. In Fed officials’ projections published in September, the median estimate of the appropriate interest rate at the end of 2026 was about 4.1%, compared with 3.8% in the June projections. These are individual projections, not a committee commitment, and they do not remove the data dependence of policy decisions. In markets, spot gold fell 0.2% to $4,050.55 an ounce ahead of the decision announcement on October 28, while December futures fell 0.2% to $4,064.60.

Traders were pricing an 83% probability of a rate increase in December, according to CME Group’s FedWatch tool, as reported by Reuters; the figure reflects market pricing at the time. The committee’s next meeting is scheduled for December 8 and 9, with the press conference to be held on December 9. Before then, the Bureau of Economic Analysis scheduled the release of its advance estimate of third-quarter GDP and September personal income and spending data for October 29 at 8:30 a.m. Eastern time. The income and spending release includes the core personal consumption expenditures price index, but no separate release date for that index has been announced. These releases will give the committee more recent data on activity and prices before the December meeting, while Goldman’s rate-hike outlook remains conditional on the data path and policymakers’ assessment.