Federal Reserve Holds Rates at 3.75% to 4% as Two Officials Vote to Raise
The Federal Reserve held its benchmark rate at 3.75% to 4% on October 28 in a 10-2 vote, with Governor Lisa Cook and Cleveland Fed President Beth Hammack dissenting in favor of a hike, as inflation remains elevated.
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The Federal Reserve held its benchmark interest rate steady on Wednesday, keeping the target range for the federal funds rate at 3.75% to 4% while it waits for more evidence on inflation. The Federal Open Market Committee approved the decision by a 10-2 vote, in its statement released at 2 p.m. Eastern time. The hold takes effect immediately and leaves short-term borrowing costs for U.S. households and businesses where they were, one month after the committee raised the range by a quarter point in September.
The committee upgraded its description of the economy, saying activity is expanding at a strong pace, up from the solid pace it reported in September. Spending has been resilient, productivity growth is strong and capital investment is robust, the statement said, and the unemployment rate has changed little. Against that strength, inflation remains elevated, and the statement said the accumulation of more information will help it determine the policy stance appropriate to ensure a timely return of inflation to its 2% goal, closing with a pledge to deliver price stability.
The two votes against came from Governor Lisa Cook and Cleveland Fed President Beth Hammack, who each preferred to raise the range by a quarter point at this meeting. Their dissents underline the pressure from the latest figures, which showed consumer prices rising 3.7% in September from a year earlier. Chair Kevin Warsh declined at his press conference to give forward guidance, and analysts cited by Reuters largely read the hold as a pause rather than an end to tightening, with Goldman Sachs Asset Management’s Kay Haigh telling Reuters the firm expects the Fed to resume rate hikes in December.
Warsh also announced a change to how the committee works, Reuters reported. Starting next year, one of the Federal Reserve’s eight annual meetings in 2027 will be devoted to broad monetary policy strategy with no vote on interest rates, with a second such meeting in 2028, reducing the number of rate decisions each year. The committee’s next meeting, its last this year, is scheduled for December 8-9.
For borrowers, a hold is not relief so much as a reprieve, because longer-term rates moved the other way, with Reuters reporting the 10-year Treasury yield near 5.04% after the announcement. That matters for anyone pricing a loan or a home purchase, since how mortgage rates are actually set depends heavily on those longer yields, not the federal funds rate alone. Further coverage will appear on the Tax & Policy desk, and our explainer on how central bank rate decisions ripple through markets sets out how the decision reaches credit cards, business loans and savings rates.
Educational coverage — not tax or investment advice.