Federal Reserve Holds Rates Steady at 3.75%–4% Amid Sticky Inflation

The Federal Open Market Committee voted 10–2 on October 28, 2026, to maintain the federal funds rate at 3.75% to 4%, citing strong economic activity and resilient domestic spending. The decision came as inflation remained elevated: the Consumer Price Index rose to 3.7% in September from 3.4% in August, while core inflation (excluding food and energy) climbed to 2.6% from 2.4%. The Fed's preferred inflation measure, the core Personal Consumption Expenditures Price Index, was projected to exceed 3%.

Governor Lisa Cook and Cleveland Federal Reserve President Beth Hammack dissented, preferring a quarter-point rate increase. This marked the second dissent for Hammack since July in favor of tighter policy, and Cook's first dissent on the committee. In a statement, the Fed acknowledged that "inflation remains elevated" but said it would gather more information to determine the appropriate policy path toward its 2% inflation goal.

Chairman Kevin Warsh told reporters that the Federal Reserve would "deliver price stability" and noted that monetary policy "medicine" is starting to work, though he cautioned there are no firm conclusions about the right course ahead. The committee also reiterated that economic activity is expanding at a strong pace, productivity growth is strong, capital investment is robust, job gains have kept pace with workforce growth, and the unemployment rate has remained stable. The central bank noted elevated uncertainty partly due to geopolitical developments but emphasized that domestic spending has remained resilient.

Warsh's comments underscored the Fed's dual focus on monitoring inflation while avoiding overly restrictive policy. Some Fed officials have called for further rate hikes to prevent an inflationary mindset from taking hold, arguing that broad-based inflation pressures will require time to subside. The decision came five days before the midterm elections, amid ongoing political debate over the Fed's interest-rate strategy and its effects on economic growth.