Fed holds rates steady at 3.75%–4% in 10–2 vote, with two officials favouring a hike

The US Federal Reserve on October 28 kept its benchmark federal funds rate unchanged at 3.75%–4.00%. The decision passed by 10 votes to 2, with Governors Cook and Hammack dissenting in favour of a rate hike. It was the Fed's first hold after a 25-basis-point increase in September, and the outcome was widely expected by markets.

What the statement said

The Federal Open Market Committee upgraded its view of economic activity to a strong pace while repeating that inflation remains elevated. Chair Kevin Warsh said after the meeting that accumulating more information would help the committee determine the policy stance appropriate to ensure a timely return of inflation to its 2% goal, adding that he was confident inflation expectations remain well anchored. The committee repeated that it will deliver price stability.

A reshaped meeting calendar

Warsh also announced changes to the meeting schedule: the committee will still meet eight times a year, but fewer gatherings will set interest rates. In 2027, seven meetings will be policy-setting sessions and one will be devoted solely to broad monetary strategy, with no rate vote or policy statement expected; in 2028, six meetings will set policy and two will focus on strategy. He said the central bank retained the ability to change rates outside its regular schedule if circumstances required it.

Market reaction

US stocks ended mixed after the decision as investors weighed the rate call alongside earnings from big technology companies including Microsoft and Alphabet. The 10-year US Treasury yield held at around 5.0%. Traders continued to price a high chance of a further increase at the committee's December 8–9 meeting, with market pricing implying odds of roughly 80% to 90%.

Asian markets traded mostly higher on Thursday morning: Japan's Nikkei gained 0.42% and Hong Kong's Hang Seng was flat, while South Korean and mainland Chinese shares fell; gold slipped to around $4,030 an ounce, near a three-month low.

What to watch next

The next decision comes on December 8–9. Incoming inflation and jobs data will determine whether the committee keeps waiting or resumes hiking.