Federal Reserve Holds Interest Rates at 3.75–4% in 10–2 Vote as December Hike Odds Climb

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The Federal Reserve holds interest rates at 3.75% to 4% after its meeting on Wednesday 28 October 2026 in Washington, pausing one month after its first rate rise in three years.

The decision keeps borrowing costs unchanged while inflation stays above the central bank’s 2% target, and it sets up a closely watched meeting on 8–9 December 2026 as the next decision point.

The Federal Open Market Committee voted 10–2 to hold the target range for the federal funds rate. Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented, preferring an immediate quarter-point rise.

The Fed said economic activity was expanding at a strong pace, domestic spending had remained resilient, and job gains had kept pace with growth in the labour force, while the unemployment rate had changed little.

In its statement, the Fed said inflation remains elevated. It added that gathering more information would help the committee judge the policy stance needed for a timely return to its 2% goal, and it restated its commitment to price stability.

Federal Reserve Holds Interest Rates — Quick Reference Summary

Item	Detail
Decision	Hold the federal funds rate at 3.75% to 4%
Date	Wednesday 28 October 2026
Vote	10–2 in favour of holding
Dissenters	Lisa Cook and Beth Hammack, both preferring a 0.25-point rise
Previous move	Quarter-point rise in September 2026, the first in three years
Inflation target	2%, with inflation described as still elevated
Next meeting	8–9 December 2026
Market pricing reported	Roughly 80–90% chance of a December rise, depending on the measure cited

A split committee: two votes for an immediate rise

The dissent from Lisa Cook and Beth Hammack underlined the split inside the committee. Both preferred an immediate quarter-point rise, arguing that the case for tighter policy had already been made by persistent inflation.

Kevin Warsh has likewise argued that inflation is too high, a position that puts the emphasis on restoring price stability even as the majority chose to pause and gather more information before its next decision.

The timing also matters politically. The decision came ahead of the 3 November 2026 midterms, a context in which the Fed’s handling of inflation and borrowing costs is under close political scrutiny, even as the central bank stresses that its decisions are driven by its mandate.

What the hold means for mortgages, markets and gold

For households, the hold does not immediately lower borrowing costs. The average mortgage rate reported by Freddie Mac was 7.32% in the week to 22 October 2026, a reminder that mortgage pricing reflects longer-term yields as well as the Fed’s policy rate.

Markets took the decision in their stride. The S&P 500 rose about 0.3% and the Nasdaq rose about 0.2%, while the 10-year yield remained above 5%.

Gold was around $4,040 on 29 October, holding near recent levels as investors weighed the prospect of a December rise against the Fed’s pause.

Why the UK is watching the Fed decision closely

The UK is watching the Fed decision closely because US rates influence global borrowing costs and the dollar, which in turn affect UK import prices, gilt yields and the room for manoeuvre at the Bank of England.

The Bank of England is due to give its verdict next month after holding rates at 3.75% in September. For UK readers, the wider Budget 2026 context is set out in the UK Budget 2026 energy payment coverage, and the related immigration changes are covered in the UK graduate visa coverage.

External reporting on the Fed decision includes Channel News Asia’s coverage of the Fed holding rates steady and PSG’s research and insights for 29 October 2026.

What to watch before the December meeting

Attention now turns to the data and commentary before the 8–9 December 2026 meeting. The December outcome is not publicly verified, and the committee has left itself room to move in either direction depending on inflation, jobs and spending data.

Market pricing pointing to a roughly 80–90% chance of a December rise is a measure of expectations, not a decision. What matters next is whether incoming evidence strengthens the case for a rise or supports a longer hold.