Fed Holds Rates Steady In Split Vote
The Federal Reserve left interest rates unchanged on Wednesday 28 October 2026, with the decision announced at 02:00 UTC+8 on 29 October 2026. The Federal Open Market Committee kept the federal funds rate at 3.75%-4.00% in a 10-2 vote. Fed Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented, preferring a 25 bps increase.
At his press conference, Fed Chair Kevin Warsh said the Fed will hold fewer meetings that set interest rates from next year. Market data below is as of the US close at 04:00 UTC+8 on 29 October 2026 unless stated.
Key Details Behind The Decision
The Fed raised rates by 25 bps in September, its first increase since July 2023. Policymakers held this time despite recent inflation readings that came in hotter than expected. They are also weighing elevated oil prices, a steep rise in borrowing costs, concerns over debt-fuelled AI spending and the looming US midterm elections. Treasury yields have risen to multi-decade highs since the September meeting, which has been seen as acting much like a rate hike.
The committee’s statement said economic activity is expanding at a strong pace and inflation remains elevated. It said the accumulation of more information will help it determine the appropriate policy stance.
Warsh Outlines Plan For Fewer Rate-Setting Meetings
Warsh said the Fed will keep eight meetings a year, but will set aside one in 2027 for broad monetary policy strategy, with neither a vote on the federal funds rate nor a policy statement expected. For 2028 he expects two strategy meetings and six policy-setting meetings. Reporters asked what disclosure might come from the strategy meetings, and the issue appears to still be under consideration.
Warsh said politics played no role in the decision and that financial and credit conditions have tightened for some businesses and households as expected. He gave no guidance on the December meeting.
Market Impact
| Market | Reaction | Supporting Market Data | Main Driver |
| US Treasury yields | Short-term yields rose after the decision, then fell during the press conference, steepening the curve. | 10-year yield traded near 5.02% at the US stock market close; 2-year yield fell to about 4.71% during the press conference | Hawkish dissents, then meeting changes read as dovish |
| US dollar | Dollar Index fell about 0.2% during the press conference and steadied in Asian trade on Thursday | Dollar Index -0.2% | Warsh’s silence on further hikes read as not hawkish enough |
| US equities | Rose modestly | S&P 500 +0.28%, Nasdaq Composite +0.27%, Dow +0.19% | Hold matched expectations; focus on earnings |
| Gold | Edged lower in early Asian trade on Thursday (07:20 UTC+8) | Near $4,050 an ounce | Fed reiterated its commitment to containing inflation; PCE data awaited |
Broader Market Implications
Financial markets are pricing an 85.0% likelihood of a 25 bps hike at the Fed’s December meeting, up from 78.3% on Tuesday, according to the CME FedWatch tool. Carol Kong, currency strategist at Commonwealth Bank of Australia, said Warsh’s silence on further hikes was interpreted as dovish, adding that some participants may have expected a hint on December.
Steve Englander, global head of G10 FX research at Standard Chartered, said the market began moving when Warsh mentioned changing the meeting schedule, which it read as a dovish measure. Traders also reined in bets for rate hikes in 2027.
What Traders Should Watch
- US third-quarter GDP and PCE inflation data at 20:30 UTC+8 on 29 October 2026.
- The European Central Bank’s decision at 21:15 UTC+8 on 29 October 2026, and the Bank of Japan’s decision on Friday 30 October 2026.
- US midterm elections on 3 November 2026.
- The Fed’s December meeting on 8–9 December 2026, and any detail on how the strategy meetings will be disclosed.
