Federal Reserve Keeps Interest Rates on Hold
28th October 2026
Today, the Federal Reserve’s Federal Open Market Committee (FOMC) by a vote of 10 – 2 kept interest rates on hold in a target range of 3.75% – 4.00%. The two dissenting members were Governor Lisa Cook and Cleveland Federal Reserve President, Beth Hammack, who both favoured an increase in rates of 25 basis points. However, officials noted that they were still committed to keeping inflation under control, but had no clear opinion as to whether or not interest rates would be raised at the next FOMC meeting in December.
Interestingly, the decision to keep rates on hold comes less than a week before the mid-term elections, where President Trump and the Republican Party are expected to lose control of the lower house, the upper house (the Senate) polls showing a leaning towards a Democrat majority. However, financial and political commentators have said there is no reason to believe that the vote was politically motivated, despite concerns over inflation where data released for the September Consumer Price Index (CPI) showed the index having risen at its fastest pace for five months.
Experts pointed out that the rise in the September CPI figures was driven to a greater extent by the on-going conflict with Iran, however, additional data released showed broad-based inflation across goods and services. Indeed, after the meeting, Chairman Warsh said, “Inflation is too high. Energy and related prices have moved higher again in recent weeks, and our job is to ensure that relative price changes in some sectors do not broaden out across the economy”. Financial markets had already expected today’s decision, as top officials had previously briefed that they saw no reason to raise rates again after a 25 basis point rise at the previous FOMC 15 – 16 September meeting, despite the fact that on-going inflation data was stronger than originally forecasted.
Furthermore, a FOMC policy statement said, “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 goal of 2.00%. The committee will deliver price stability”. Financial markets have already priced in a December interest rate increase despite the Federal Reserve’s commitment to further data before deciding on a rate increase. However, many experts suggest that inflation will not be falling. All in all, analysts suggest that this was a wait and see decision saying that a rate rise in December is a foregone conclusion, so why wait? Still, the spectre of politics looms over this decision, although Chairman Warsh was adamant that was not the case.
