Fed Holds Rates at 3.75%-4% as Cook and Hammack Push for a Hike

What happened

The Federal Reserve left its benchmark interest rate alone on Wednesday, Oct. 28, keeping the federal funds target range at 3.75% to 4%. The vote was 10-2, according to the Fed’s official statement.

The two officials who voted no wanted to go further. Governor Lisa Cook and Cleveland Fed President Beth Hammack both preferred to raise rates by a quarter of a percentage point. Futures traders had put the odds of a pause at about 90% going in, according to Kiplinger, and stocks barely moved in the minutes after the announcement, Reuters reported.

The hold comes one month after the Fed, led by Chairman Kevin Warsh, raised rates in September for the first time in three years. It also lands six days before the U.S. midterm elections, in a campaign dominated by the cost of living, The Associated Press noted.

Why the Fed decided to wait

Inflation is the problem the Fed is trying to solve, and the statement says plainly that it “remains elevated.” Consumer prices rose 3.7% in the 12 months to September, up from 2.4% in February, just before the Iran war sent oil and gasoline prices higher, the AP reported. Gasoline alone jumped 9.1% in September, according to Kiplinger.

So why not raise again? The key is one rewritten sentence. In September, the statement said the hike itself would support a return to 2% inflation. This time, it says the Fed wants “the accumulation of more information” before deciding what’s needed, Yahoo Finance’s side-by-side comparison showed. One plain reading: the September increase is still working its way through the economy, and officials want to see more data before stacking another one on top.

Timing may have played a part too. Stephanie Roth, an economist quoted by Yahoo Finance, said Fed officials “would very much prefer not to” move rates right before an election. Warsh said politics played “no role” in the decision, according to Yahoo Finance’s live coverage.

What changed in the Fed’s statement

Small word changes in a Fed statement are how markets read its mood. Here are the main edits from September to October:

The upgrade to a “strong” economy matters. The statement also cites resilient spending, strong productivity and robust business investment, and says hiring has roughly matched growth in the labor force. A central bank doesn’t usually describe the economy in those terms if it’s planning to ease up. Reuters noted that the statement hints at more hikes depending on inflation, which is the kind of forward guidance Warsh has said he would rather avoid.

Who dissented, and why it’s notable

Two dissents in favor of a hike show the committee is split on how fast to move. Hammack also dissented in July for the same reason, Reuters reported. For Cook, it was her first dissent since President Joe Biden appointed her in 2022, according to the AP.

Cook’s vote draws extra attention because of her standoff with the White House. President Donald Trump tried to fire her last year, and in June the Supreme Court ruled she could keep her job while the legal fight continues, the AP reported. Last month, Trump set up a committee to look into mortgage-fraud allegations against her, which she denies. Trump has demanded rate cuts and criticized the September hike, though he mostly blamed the committee rather than Warsh, whom he appointed.

Some analysts read the result as slightly gentler than feared, according to Reuters, because some had expected three or four dissents rather than two.

The numbers in context

A useful way to see where policy stands is to compare the Fed’s rate with inflation. The middle of the 3.75%-4% range is about 3.9%. With consumer prices up 3.7% over the past year, that leaves the Fed’s rate only about 0.2 percentage point above inflation. That’s a thin cushion, and it helps explain why two officials wanted to keep going.

Bond markets are sending a similar signal. Shortly after the decision, the 10-year Treasury yield rose to about 5.05% and the two-year yield, the one most sensitive to Fed moves, rose to about 4.78%, according to Reuters. A two-year yield well above the Fed’s current rate suggests investors expect short-term rates to be higher on average over the next two years.

For households, the pause offers little relief. Earlier in October, the average 30-year mortgage rate reached 7.4%, its highest in three years, before easing a little, the AP reported, and Oxford Economics estimates about 5 million more Americans have been priced out of buying a home since January. Credit card rates track the Fed closely. For a rough sense of scale, each quarter-point increase adds about $12.50 a year in interest on a $5,000 balance carried all year.

What happens next

More data arrives quickly. The Fed’s preferred inflation gauge, the PCE price index, is due Thursday, Oct. 29, and economists expect it to show 3.6% for September, with the core measure at 3.1%, the AP reported. The first estimate of third-quarter growth also comes Thursday, with forecasts around 3%.

The Fed’s final meeting of 2026 is Dec. 8-9, and it will come with new economic projections. In September, officials penciled in one more hike this year. Futures traders put the chance of a December increase at about 84% on decision day, per Yahoo Finance. Kiplinger reported the odds had been just 42% a month earlier. Goldman Sachs Asset Management expects hikes to resume in December, and Natixis called one “likely a foregone conclusion,” Reuters reported.

North of the border, the Bank of Canada went the other way on the same day, raising its rate to 2.5%. For background on the inflation numbers behind both decisions, see our explainer on September’s CPI report.

Quick answers

What is the Fed’s interest rate now?

The federal funds target range is 3.75% to 4%, unchanged after the Oct. 28, 2026, meeting.

Who dissented at the October Fed meeting?

Governor Lisa Cook and Cleveland Fed President Beth Hammack. Both wanted a quarter-point rate increase.

When is the next Fed meeting?

Dec. 8-9, 2026, with updated economic projections released at the end of the meeting.