The Fed holds rates at 3.75%-4.00% after a tense two-day meeting that ended on October 28, 2026, with a 10-2 vote from the Federal Open Market Committee.
It was not a quiet decision. Two governors wanted a hike, the chair faced open pressure from the White House, and the next move now hinges on fresh inflation data due within days.
Chair Kevin Warsh did not try to smooth over the disagreement. “We just came out of a heck of a family fight,” he told reporters after the decision. That line, blunt by central bank standards, set the tone for everything that followed.
Ten members backed holding the policy rate steady. Governors Lisa Cook and Beth Hammack dissented, preferring a quarter-point hike instead. Their dissent put the internal split on the record, at a moment when inflation is still running well above the Fed’s target.
Why the Fed Holds Rates Despite High Inflation
September CPI inflation came in at 3.7% year on year. That is still elevated, and well above the 2% inflation target Warsh has pledged to defend. On that reading alone, a hike might have looked like the obvious call.
But, in a decision where the Fed holds rates, the committee chose to wait. Warsh said the Fed will be “better positioned” in December to decide on rates after more data arrives. He described the coming period as “information-rich,” a stretch that should give policymakers a clearer picture before they move again.
Fresh PCE inflation data is due Thursday, the first major test of that wait-and-see stance. If it points the same way as September CPI, the case for December action gets stronger; if it softens, the hold looks wiser.
Warsh, in the job since late May after being chosen by President Donald Trump to succeed former chair Jerome Powell, has already overseen a rate hike in September. This time the committee held firm, and Warsh framed the pause as patience, not retreat.
A Split Vote, Out in the Open
Two dissents in favour of tighter policy carry weight. Cook and Hammack did not argue for a cut, or for holding for longer. They wanted rates higher, now.
That puts Warsh in a tricky middle, leading a committee where a sizeable minority thinks policy is still too loose, while the president who picked him wants much lower rates.
Cook’s position adds another layer. Trump has been trying to fire her for more than a year, with a possible White House administrative proceeding set for November 5. She voted for a hike anyway, and Hammack joined her, giving the dissent a breadth that is hard to dismiss as a single voice.
For markets and borrowers, the split signals what December could bring: the door stays open to tightening if inflation stays hot, without locking a hike in.
“Politics Played No Role,” Warsh Says
The political backdrop could hardly be louder. Trump has criticised the Fed for failing to deliver big rate cuts and, after the September rate rise, blamed Warsh’s colleagues as “hostile” and “partisan.” Trump said on October 28 he had not spoken with Warsh about the decision.
Warsh answered that charge head-on. “Politics played no role in the decision. I just spent two days with my colleagues upstairs. I didn’t hear an utterance about politics,” he said. He added that the coming period will be “information-rich” with “nothing to do” with politics.
Treasury Secretary Scott Bessent backed the chair in public, saying he and the president have “great confidence that Chair Warsh will steer the Fed between the right combination of growth and inflation.” Trump has also called for Powell to vacate his Board seat.
What It Means for Borrowers and the December Meeting
For households, the news that the Fed holds rates means borrowing costs stay where they are for now. That is cold comfort for voters who cite affordability and high borrowing costs as top concerns, but it also means no fresh hike landed on top of already tight conditions.
The question now shifts to December. If inflation stays near 3.7%, a hot PCE print would strengthen the dissenters’ case inside the room. If inflation cools, the hold can stretch.
December will not be a quiet meeting: the split is now public, and both sides inside the Fed will claim the next numbers support their case.
Midterms Add to the Pressure
Midterm elections on November 3 will decide control of the House and Senate, and they arrive just days after this decision. Affordability sits near the top of voters’ concerns, and high borrowing costs feed straight into that worry.
That timing puts the Fed in an awkward spot, however firmly Warsh denies any political influence. By waiting for more data, the committee avoided a sharp move in election week, while keeping its options open for December.
Sources and Resources
Reuters reporting on the Federal Reserve decision
Credit: This article is based on Reuters reporting on the October 28, 2026 Federal Reserve decision.
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FAQs
What did the Fed decide on October 28, 2026?
The Fed holds rates decision held the policy rate at 3.75%-4.00% in a 10-2 vote. Governors Lisa Cook and Beth Hammack dissented, preferring a quarter-point hike.
Why did two governors vote for a hike?
They preferred tighter policy while September CPI inflation was 3.7% year on year, well above the Fed’s 2% target.
What did Chair Kevin Warsh say about politics?
Warsh said politics played no role, telling reporters he spent two days with his colleagues and did not hear an utterance about politics. He said the coming period will be information-rich, with nothing to do with politics.
What happens next, and when is the next decision point?
Fresh PCE inflation data is due Thursday, and Warsh said the Fed will be better positioned in December to decide on rates after more data. December is now the key meeting to watch.
What does the hold mean for borrowers?
When the Fed holds rates, borrowing costs stay where they are for now, with no new hike added. December will depend on incoming inflation data, so watch Thursday’s PCE figures.
Conclusion
The Fed holds rates, but that was not a sign of agreement. It was a pause after a frank internal fight, with two governors pushing for higher rates and a chair insisting the decision rested on economics, not politics.
Inflation at 3.7% keeps the pressure on, Thursday’s PCE data will shape the debate, and December now looms as the meeting where patience either pays off or gives way to action.
The Fed holds rates story will return in December, when the Fed holds rates question is back on the agenda and markets judge whether the Fed holds rates stance still holds.