Fed Holds at 3.75%–4.00% — but Two Voters Wanted a Hike, and Warsh Refused to Talk About December

Highlights

• The Federal Open Market Committee voted 10–2 on Wednesday, October 28, 2026 to maintain the target range for the federal funds rate at 3.75% to 4 percent
• Governor Lisa D. Cook and Cleveland Fed President Beth M. Hammack voted against, preferring to raise the range by a quarter point — Cook’s first dissent on a policy decision
• The statement upgraded the economy to “expanding at a strong pace”, repeated that “Inflation remains elevated”, and kept the pledge: “The Committee will deliver price stability”
• Chair Kevin Warsh refused to signal December: he does not believe “in prejudging meetings”, and on price stability conceded only, “We’re working on it”
• Markets took the decision calmly — the S&P 500 rose 0.1% and the Dow 0.2% minutes after the release, while the 10-year Treasury yield rose 3 basis points to 5.03%

The decision, in the Fed’s own words

The Federal Open Market Committee approved the decision in a 10-2 vote to maintain the target range for the federal funds rate at 3-3/4 to 4 percent (Text of the Fed’s October statement, via Morningstar/Dow Jones). The statement’s key lines, in full:

“Economic activity is expanding at a strong pace. While uncertainty remains elevated owing, in part, to geopolitical developments, domestic spending has been resilient. Productivity growth is strong, and capital investment is robust. Job gains have kept pace with the workforce, and the unemployment rate has changed little. Inflation remains elevated.” (Text of the Fed’s October statement, via Morningstar/Dow Jones)

“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 2 percent goal. The Committee will deliver price stability.” (Text of the Fed’s October statement, via Morningstar/Dow Jones)

Two changes from September matter. The assessment of growth was upgraded — activity is now expanding at a “strong” pace, up from “solid” in September (Reuters). And the “accumulation of more information” line is, as Reuters noted, a hint of the sort of forward guidance that Chair Kevin Warsh has said he wants to avoid — guidance by another name, pointing at data rather than dates (Reuters). This was the outcome the preview pointed to: 94 of 100 polled economists had expected the hold.

The two dissents are the story

Voting against the action were Lisa D. Cook and Beth M. Hammack, who preferred to raise the target range by a quarter percentage point at this meeting (Text of the Fed’s October statement, via Morningstar/Dow Jones). Hammack, the Cleveland Fed president, is a consistently hawkish voice, and her dissent was expected by some analysts (Reuters). Cook’s was not. The governor cast her first dissent on a central bank policy decision — favouring a hike — while being targeted by President Donald Trump for removal from the central bank (Reuters). A governor under political pressure to leave dissenting in the direction opposite to the president’s well-known preference for lower rates is, at minimum, a striking assertion of independence. XTB’s market note made the same point from the trading side: Cook’s vote was particularly surprising, as she had not previously dissented, and the split suggests pressure to tighten further remains meaningful despite the October pause (XTB).

Warsh gives December nothing

At the press conference, Warsh — who took over as head of the central bank in May — did not offer guidance on the outlook, acknowledged the central bank had not achieved price stability, and said only: “We’re working on it” (Reuters). He added that he does not believe “in prejudging meetings” and noted that “a lot of things can happen, so I’m not going to be able to share with you my musings about what happens when this group gets together six weeks from now” (Reuters). Bloomberg’s summary was that officials reiterated their commitment to containing inflation without offering a clear signal they might raise rates at their next meeting in December (Bloomberg via Advisor Perspectives).

That silence now meets data within a day: policymakers get fresh figures on Thursday when the Bureau of Economic Analysis releases the September reading of the PCE price index, the Fed’s preferred inflation gauge (Bloomberg via Advisor Perspectives).

How markets took it

The reaction was muted, exactly as a fully priced hold should produce. A few minutes after the release, the S&P 500 was up 0.1%, the Dow Jones rose 0.2% and the Nasdaq 100 hovered near flat, while the yield on 10-year US Treasury bonds stood at 5.03%, up 3 basis points from the previous close (XTB). Reuters framed the decision as opting to delay any changes to borrowing costs until after next week’s US midterm elections while awaiting further data on the path of inflation (Reuters) — the meeting fell less than a week before the November 3 vote.

What this decision actually tells us

First, the centre of the committee is not where the argument is. A 10–2 hold with both dissents pointing up means the live debate inside the Fed is no longer cut-versus-hold but hold-versus-hike — the same shift visible in Pakistan, where the State Bank raised its policy rate to 12% this month against the same energy-driven inflation.

Second, “more information” is the new forward guidance. Warsh dislikes pre-commitment, so the committee has substituted a data trigger for a date: September’s 3.7% inflation, with energy up 20.4%, is the problem; Thursday’s PCE print and the data flow into December 8–9 are the test. It is why gold and silver sold off ahead of the meeting while oil held above $115 — the assets are trading the December coin flip, not this decision.

The bottom line: the Fed did the expected thing and said as little as possible about the next thing, but the 10–2 split quietly changed the story. December is now a meeting where a hike is openly on the table, sponsored by two named voters — and the chairman has promised nothing except more information.