Federal Reserve Holds Rates at 3.75% to 4% Amid Dissent

The Federal Reserve kept its benchmark interest rate unchanged at 3.75% to 4% following its October meeting, as policymakers weighed persistent inflation against the need for additional economic data. The decision, announced Wednesday, Oct. 28, 2026, drew two dissents from officials who favored a quarter-percentage-point increase, while financial markets turned their attention to the central bank's next meeting in December.

Federal Reserve Governor Lisa Cook and Cleveland Fed President Beth Hammack supported raising rates by 0.25 percentage points, according to the meeting decision. The majority opted to maintain the existing target range, a move broadly anticipated by financial markets.

The central bank emphasized that further information would guide its next policy decision. Its statement also reiterated that inflation remains above the Federal Reserve's 2% objective.

"Inflation remains elevated," Federal Reserve policymakers said in their post-meeting statement.

The committee linked its next steps to incoming information about economic conditions and its price-stability mandate.

"The accumulation of more information will help the Committee determine the policy stance appropriate to ensure a timely return of inflation to the Committee's 2 percent goal. The Committee will deliver price stability," the Federal Reserve said in the statement.

Federal Reserve Chairman Kevin Warsh was scheduled to discuss the decision at a news conference at 2:30 p.m. Eastern Time on Wednesday.

Interest-rate futures had indicated a strong preference for holding rates steady before the announcement. According to the CME FedWatch tool, traders had assigned approximately a 93% probability to an unchanged decision, compared with less than 30% a month earlier.

Market expectations for December have shifted toward another increase. The source report said federal funds futures implied an approximately 85% likelihood of a rate hike at the next meeting.

New York Fed President John Williams previously said there was "no need for urgency" following the September increase, the central bank's first rate hike in three years, according to the report.

Federal Reserve Vice Chair Philip Jefferson also indicated that policymakers needed time to evaluate economic conditions and market movements following the September decision.

Consumer borrowing costs have risen alongside Treasury yields. According to Mortgage News Daily, the average 30-year fixed mortgage rate reached 7.33%, up from 7.12% in September. Bankrate reported that the average home equity loan rate increased to 8.77%, compared with 8.28% the previous month.

Meanwhile, the average money market annual yield stood at 0.45%, up one basis point from September, according to Haver. The annual percentage yield on a five-year certificate of deposit reached 1.83%, an increase of eight basis points over the same period.

Higher borrowing costs have continued to affect household finances, particularly for lower- and middle-income consumers. Credit card rates reached their highest levels since late 2025, while auto loan rates remained near 7%, with higher rates common in the used-car market, according to the source report.

US stock indexes traded unevenly ahead of the announcement. At 1:40 p.m. Eastern Time on Wednesday, the S&P 500 had gained 0.2%, while the Dow Jones Industrial Average rose 135 points, or 0.3%. The Nasdaq Composite traded near unchanged.

The 10-year US Treasury yield climbed more than two basis points to 5.02%, while the two-year yield rose nearly three basis points to 4.766%, according to the market figures in the report.

Steven Wieting, co-founder of the CIO Group, said delaying an increase until December could extend the period of uncertainty over inflation. He argued that raising rates sooner could be preferable, although he did not predict that the Federal Reserve would act at the October meeting.

"I'm not predicting action today," Steven Wieting, co-founder of the CIO Group, told CNBC on Wednesday.

Wieting said the possibility of an earlier move remained greater than market expectations had suggested, given Chairman Kevin Warsh's signals that inflation remained too high.

"But the chance that they actually shock us now is above 7%," Wieting said.