Fed Holds Rates at 3.75%-4% in a 10-2 Vote as Cook and Hammack Dissent and Warsh Reshapes the 2027 Calendar

The Federal Reserve left its benchmark interest rate unchanged on Wednesday, October 28, 2026, keeping the federal funds target range at 3.75% to 4% while stating that inflation "remains elevated." The decision, released at 2 p.m. EDT after a two-day meeting, passed by a 10-2 vote, according to the Federal Open Market Committee's statement.

Governor Lisa D. Cook and Cleveland Fed President Beth M. Hammack voted against the decision, saying they preferred to raise the target range by a quarter percentage point. The range has been in place since the central bank approved a quarter-point increase in September, CNBC reported.

What the statement said

The committee described economic activity as "expanding at a strong pace," adding that domestic spending has been resilient, productivity growth is strong and capital investment is robust. It said job gains have kept pace with the workforce and that the unemployment rate has changed little, while uncertainty remains elevated owing in part to geopolitical developments.

On prices, the statement said: "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."

According to Reuters, the assessment of the economy was upgraded to "strong" from the "solid" expansion described after the September 15-16 meeting. CNBC noted that the only other substantial change was the removal of a sentence that had explained the September increase.

In a separate implementation note, the Board of Governors voted unanimously to keep the interest rate paid on reserve balances at 3.90%, effective October 29, 2026, and to keep the primary credit rate at 4.0%. The standing overnight repurchase agreement rate remains 4.0%, and the overnight reverse repurchase offering rate stays at 3.75%.

The dissents

This was Cook's first dissent since joining the Fed in 2022, CNBC reported. Reuters described Hammack as a consistently hawkish voice who also dissented in July for the same reason. Dallas Fed President Lorie Logan and Minneapolis Fed President Neel Kashkari, who joined Hammack in voting no when the committee held in July, sided with the majority this time, according to CNBC.

CNBC also reported that Cook remains at the center of an effort by President Donald Trump to remove her from office, with a hearing scheduled for early November after the Supreme Court halted an earlier attempt.

Warsh: fewer rate-setting meetings ahead

At his post-meeting news conference, Chairman Kevin Warsh announced a change to the committee's calendar. "We believe eight meetings per year is the right number for the FOMC. But in 2027, one meeting will focus exclusively on broad monetary policy strategy, with neither a vote on the federal funds rate nor a policy statement anticipated," he said, according to the preliminary transcript of his opening statement. He said he expects two strategy-focused meetings and six policy-setting meetings in 2028.

Warsh said the first-half increase in gross domestic product had been revised up to 2.4% from an earlier estimate of 1.8%, and that third-quarter growth was likely running above 3%, led by consumer spending, with business investment likely rising at about a double-digit pace. He said inflation has been running above the committee's objective "for close to 6 years" and that energy and related prices "have moved higher again in recent weeks." He also said financial and credit conditions had tightened for some businesses and households since the September action.

Market reaction and pricing

U.S. stock indexes rose after Warsh began speaking, with the S&P 500 and Nasdaq Composite each up 0.2%, Reuters reported. The 2-year Treasury yield fell 3.8 basis points to 4.7%, while the 10-year yield rose 5 basis points to 5.042% and the 30-year yield climbed 6 basis points to 5.367%. The U.S. dollar index slipped 0.2%.

Before the meeting, markets had priced in a less than 10% chance of a hike, CNBC reported, citing the CME Group's FedWatch tool. After the decision, FedWatch showed a 79.8% probability of a quarter-point increase in December, up from 73.4% a week earlier, Investing.com reported.

"Two dissents rather than the three or four many had expected is a dovish surprise at the margin, but an apparent upgrade in the Fed's assessment of the economy itself should leave markets in no doubt that more tightening is coming," Karl Schamotta, chief market strategist at Corpay, told Reuters. Karen Manna, a fixed income strategist at Federated Hermes, said the Fed "has effectively deferred the debate rather than settled it."

Backdrop: inflation, growth and the midterms

CNBC reported that the Fed's preferred inflation gauge is expected to show prices rising above 3% in September even excluding food and energy, and that the Atlanta Fed's GDPNow tracker points to 3.4% annualized growth in the third quarter. Inflation has been above the 2% target for more than five years, the network noted.

The decision also came days before nationwide midterm elections on November 3, with control of Congress at stake. CNBC reported that Vice Chair Philip Jefferson and New York Fed President John Williams had both said current conditions give policymakers time to evaluate their next move. The committee's next scheduled decision is in December.