Fed Holds Rates at 3.75%–4.00%, Warsh Keeps Hike Option Open

Fed holds rates at 3.75%–4.00% in a 10-2 vote as Cook and Hammack back a hike. What Warsh said, December hike odds and what it means for your money.

The Federal Reserve left its benchmark interest rate at 3.75% to 4.00% on Wednesday, October 28, but the message from Chair Kevin Warsh was that a rate rise is still on the table.

In its latest Fed interest rate decision, the Federal Reserve left the federal funds rate unchanged at 3.75% to 4.00% on Wednesday, October 28, 2026, in a split 10-2 vote. Chair Kevin Warsh declined to rule out another increase, and futures markets now treat a quarter-point Fed rate hike in December 2026 as more likely than not.

The pause follows September's hike, the Fed's first increase in about three years, and comes as inflation runs well above the central bank's 2% goal while hiring slows.

What the Fed decided

The Federal Open Market Committee (FOMC), the Fed group that sets interest rates, kept its target range for the federal funds rate at 3.75%–4.00%. That's the rate banks charge each other for overnight loans, and it feeds through to most other borrowing costs. CNN's live coverage said the hold matched economists' expectations.

The vote and the dissents. Earlier coverage said two officials voted for an immediate hike, and that has now been confirmed. According to CNN and Yahoo Finance, the vote was 10-2. Fed Governor Lisa Cook and Cleveland Fed President Beth Hammack both dissented in favor of a quarter-point (25 basis point) increase. One basis point is 0.01 percentage point. CNN noted that Cook had not dissented since joining the Board in 2022. By contrast, the September vote to hike was 12-0.

What the statement said. The Fed said uncertainty remains high, partly because of geopolitical developments, CNN reported. Industry Week reported that officials raised their inflation expectations. One independent analysis on Substack said the statement upgraded its description of economic activity from "solid" to "strong" and added language about gathering more information before setting policy. That reading comes from a less established source, so check it against the Fed's official statement.

What Warsh said

Warsh's tone was firm. ROIC.ai reported that he said the Fed will not tolerate inflation above its 2% target. That is a hawkish message, meaning it leans toward higher rates to bring inflation down.

He also:

Described September's hike as working. According to Yahoo Finance, Warsh called the hike the removal of "a dose of accommodation" (that is, policy that had been supporting growth) and said the committee broadly believes it is starting to work.
Rejected any political motive. With the US midterm elections on November 3, Warsh said politics played "no role" in the decision, Yahoo Finance reported.
Avoided forward guidance. FXStreet and TradingKey said he did not signal the Fed's next move. Forward guidance means hinting at future rate decisions ahead of time.
Wouldn't call financial conditions "tight." Yahoo Finance reported that analysts at Deutsche Bank and TD Securities took this as laying the groundwork for a December hike. That is their interpretation, not something Warsh said.

How markets reacted

The reaction right after the decision was fairly mild, and the reports don't all line up neatly.

Treasury yields: The two-year Treasury yield, which closely tracks rate expectations, fell to 4.56% from 4.61% as Fed officials spoke after the meeting, according to 24/7 Wall St. (October 31).
Gold: Gold dropped below $3,900 an ounce on October 30 as traders weighed tighter policy, FXStreet reported. Higher rates make non-yielding assets like gold less attractive. Our gold report has more.
Stocks and the dollar: Several outlets described small moves in US stock futures and the dollar around the announcement. We could not find a consistent, well-sourced figure, so we haven't quoted one.

For investors outside the US, a hawkish Fed tends to support the dollar against the euro, yen and emerging-market currencies, though that link is not guaranteed. Our look at central banks turning hawkish covers the ECB, Bank of England and Bank of Japan.

Will the Fed hike in December?

The next FOMC meeting is on December 8–9, 2026, according to an analysis on Fidelis Capital Partners' Substack.

Estimates of the odds vary depending on the source and when they were taken. All of them show a hike as more likely than not:

Source	December hike odds	When
CNN, citing CME FedWatch	85% (up from 78%)	Oct 28
TradingKey	Up to 83%	After Oct 28
Tech-Insider, citing Reuters	About 80%	Late October
24/7 Wall St.	About 76%	Oct 31
Fidelis Capital Partners	72%	Late October
FXStreet	70% (down from 84%)	Oct 30

CME FedWatch calculates these odds from fed funds futures prices, so they show what traders are betting on. They are not a forecast from the Fed, and they change with every new data release.

Why a hike is possible. Inflation is moving the wrong way. Headline CPI rose 3.7% in the year to September, while core CPI (which excludes food and energy) rose 2.6%, according to the Bureau of Labor Statistics. CNN reported that inflation climbed from 3.4% in August to 3.7% in September. Reuters, via MarketScreener, pointed to stronger-than-expected third-quarter growth and higher gasoline prices. The Fed's preferred inflation gauge, the PCE price index, is covered in our PCE inflation report.

Why the Fed might wait. The job market is cooling. Employers added just 29,000 jobs in September, well short of forecasts, and the unemployment rate rose to 4.2% from 4.1%, CNBC reported. Yahoo Finance noted that economic signals have shifted since the Fed's unanimous September vote.

What it means for your money

General patterns only. Your own situation may differ. Our guide to how rising rates affect stocks, gold, savings and loans goes into more detail.

Savings: Yields on high-yield savings accounts and CDs usually track the fed funds rate, so they may stay high or rise if the Fed hikes.
Mortgages: Fixed mortgage rates follow longer-term Treasury yields more than the Fed's rate itself, so they may not move in step with the Fed.
Credit cards: Most card rates are variable and tied to the prime rate, which moves with the fed funds rate. If the Fed raises rates in December, card rates would generally be expected to follow, though timing depends on your card agreement.
Stocks: Higher rates can weigh on fast-growing tech companies, whose value depends more on future profits.
Gold: As October showed, rising rate expectations have pressured gold prices.

What to watch next

November 3: US midterm elections.
November 6: The October jobs report. See our jobs report preview.
CPI and PCE inflation releases before the December meeting.
Fed speeches, especially from Cook and Hammack, who pushed for a hike.
December 8–9: The next FOMC decision.

FAQ

What is the federal funds rate right now?

The target range is 3.75% to 4.00%, unchanged at the Fed's October 28, 2026 meeting (CNN).

When is the next Fed meeting?

The next FOMC meeting is on December 8–9, 2026, and the rate decision is due on the second day.

Will the Fed raise rates in December 2026?

Nobody knows yet. Futures pricing in late October put the odds at about 70%–85%, and Warsh did not commit either way. The jobs and inflation data due before the meeting will matter.

Who dissented at the October 2026 FOMC meeting?

Governor Lisa Cook and Cleveland Fed President Beth Hammack, who both wanted a 25 basis point hike.

Why did the Fed raise rates in 2026?

The Fed hiked in September, unanimously, its first increase in about three years, because inflation was rising further above its 2% target.

Sources

This article is for informational purposes only and is not financial advice. Markets move quickly; check live prices before making decisions.