Fed holds target range at 3.75%–4% in October as two members favour a rise
The FOMC held its target range at 3.75%–4% on October 28, 2026, in a 10–2 vote. The Committee described activity as strong and inflation as elevated, while both dissenters preferred a rate increase.
View original sourceThe Federal Open Market Committee held the federal funds rate target range at 3.75%–4% on October 28, 2026, leaving it unchanged from September. The decision passed by a 10–2 vote, with both dissenters favouring an increase rather than a reduction. The Committee also said it was continuing its policy of maintaining ample reserves in the banking system.
The hold follows a move to a higher range in September, when the target changed from 3.5%–3.75% to 3.75%–4%. Before that, the range had remained at 3.5%–3.75% at the recorded decisions from December 2025 through July 2026. October therefore maintained September's higher setting rather than reversing it.
Strong activity and elevated inflation
In its statement, the Committee characterised economic activity as expanding at a strong pace and domestic spending as resilient. It described productivity growth as strong and capital investment as robust, while saying job gains had kept pace with the workforce and unemployment had changed little. It also said uncertainty remained elevated, partly because of geopolitical developments.
The Committee said inflation remained elevated and that accumulating more information would help it determine the stance needed for a timely return to its 2% goal. Lisa D. Cook and Beth M. Hammack voted against the action because they preferred to raise the range by one-quarter percentage point at this meeting. Their dissent establishes a preference for tighter policy, not a commitment by the Committee to a subsequent increase.
Implications for borrowing and demand
The decision leaves the policy-rate setting unchanged rather than adding a fresh tightening step. If September's higher range feeds through to lending rates, borrowing costs could continue to restrain interest-sensitive consumption and business investment. However, the Committee's description of resilient spending and robust investment suggests that its assessment did not point to broad weakness in those areas.
Slower credit-financed demand could, over time, help ease inflation pressure, depending on how borrowers and lenders respond. But the statement's combination of strong activity and elevated inflation supports a narrower conclusion: policymakers retained the existing setting while seeking more information, without specifying the timing or direction of the next move.
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