Photo: Federalreserve (official Federal Reserve photo), public domain, via Wikimedia Commons.
The United States Federal Reserve held its benchmark interest rate steady on Wednesday, October 28, keeping the federal funds target range at 3.75% to 4%, according to the Federal Open Market Committee's statement. The decision was approved by a 10-2 vote, with Governor Lisa Cook and Cleveland Fed President Beth Hammack dissenting in favour of a quarter-point increase.
The hold follows a quarter-point increase in September, the Fed's first rate rise since 2023, which lifted the target range to its current level. According to market reports, the October decision had been widely expected, with the CME FedWatch tool showing a better than 90% probability of no change on the first day of the two-day meeting.
In its statement, the committee described economic activity as expanding strongly while noting that inflation remained elevated. Consumer prices rose 3.7% in the year to September, up from 3.4% in August, according to official data cited in coverage of the decision, well above the Fed's 2% long-run goal.
At the press conference that followed, Fed Chair Kevin Warsh acknowledged a tense internal debate. "We just had a fairly heated debate internally, with serious and careful exchanges. I think we made the right policy decision at this time," Warsh said, according to Reuters coverage of the briefing. He said inflation was still too high and that the Fed had not yet brought it under control.
Markets reacted in mixed fashion. According to Aju Press, the S&P 500 closed up 0.28% at 7,744.0, while the yield on the U.S. 10-year Treasury note rose 2 basis points to 5.02% and the dollar index fell 0.19% to 102.13, reflecting continued concern about further tightening.
What happens next matters for borrowers and businesses alike. The Fed gave no indication that rate cuts are under consideration, and its statement left open the possibility of another increase at its final meeting of the year, scheduled for December 8-9. For households, the hold means borrowing costs stay where September's increase put them; mortgage and corporate funding costs will continue to follow market rates rather than the policy rate alone.
This post reports the actual outcome of the October 28 decision. COCONOPS reported on October 28 only that a decision was due; the outcome above is new.