US Federal Reserve holds rates at 3.75%–4% in a 10–2 vote
The pause follows September’s first increase since 2023. The Fed says more information will help it decide how to bring inflation back to its 2% goal.
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The pause follows September’s first increase since 2023. The Fed says more information will help it decide how to bring inflation back to its 2% goal.
The US Federal Reserve held its federal funds target range at 3.75%–4% on 28 October 2026, in a 10–2 vote. Chair Kevin Warsh also announced plans to reduce the number of scheduled meetings devoted to setting interest rates from fall 2027.
The Federal Open Market Committee, the Fed’s rate-setting body, paused after September’s increase—the first since 2023—established the current range. Officials had cited rising inflation, which rose from 3.4% in August to 3.7% in September. Committee members Lisa D. Cook and Beth M. Hammack preferred a quarter-percentage-point increase rather than a hold.
The unchanged target is a policy benchmark that influences credit-card and mortgage borrowing costs, as well as rates on some savings accounts.
The Fed currently holds eight regularly scheduled policy meetings each year, with additional meetings as needed. Warsh announced changes to the purpose of the scheduled meetings on 28 October, the Guardian said.
| Timing | Annual meetings convened to set rates |
|---|---|
| From fall 2027 | Seven of eight |
| In 2028 | Six of eight |
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Under the announced plan, the remaining meetings would focus on broader monetary policy. The change would therefore reduce scheduled rate-setting meetings, rather than the total of eight annual meetings.
The 28 October statement described economic activity as expanding strongly and inflation as still elevated. Domestic spending remained resilient, investment was robust and unemployment had changed little. The committee said more information would help it determine the policy needed for a timely return to its 2% inflation goal.
In 2000, the Fed switched its primary inflation measure from the consumer price index (CPI) to the personal consumption expenditures (PCE) price index. PCE covers spending by and on behalf of households and nonprofits serving them, while CPI measures households’ out-of-pocket spending.
Analysis
Nicholas Economides, an economics professor at NYU Stern Business School, offered an explanation focused on the approaching US midterm elections. He said election timing made radical action less likely because the economy would not have time to adjust before voting. That was his analysis, rather than the rationale in the Fed’s 28 October statement.
Economides also said rate increases alone cannot resolve inflation caused by supply shocks—disruptions that restrict available goods or raise their cost. Higher rates can help when demand outpaces supply, he said, but can otherwise slow the economy without fixing the supply problem.
Under the Fed’s timetable of publishing minutes three weeks after a policy decision, the 28 October meeting minutes are due on 18 November. Its calendar tentatively schedules the next policy meeting for 8–9 December.
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