Federal Reserve holds its key rate at 3.75% to 4%, with two votes for a hike

The Federal Reserve left its benchmark interest rate unchanged on Wednesday, October 28. The Federal Open Market Committee kept the target range for the federal funds rate at 3.75% to 4%, according to the statement it released at 2 p.m. Eastern time. The decision follows a quarter-point increase at the committee's September 15-16 meeting, which is so far the only change to the range in 2026.

The vote was 10 to 2. Lisa D. Cook, a member of the Board of Governors, and Beth M. Hammack, president of the Federal Reserve Bank of Cleveland, voted against the decision. The statement says both preferred to raise the range by a quarter percentage point at this meeting.

What the committee said

The statement describes economic activity as "expanding at a strong pace," a step up from the "solid pace" in September's statement. It says domestic spending has been resilient, productivity growth is strong, and job gains have kept pace with the workforce, with the unemployment rate little changed. Uncertainty, it adds, remains elevated, partly because of geopolitical developments.

On prices, the committee repeated that "Inflation remains elevated." In September it said that raising the rate would support a "timelier return" to its 2% goal. This time it said that "The accumulation of more information will help the Committee determine the policy stance" needed to bring inflation back to the goal in good time. Both statements end with the same sentence: "The Committee will deliver price stability."

A year of holds, one increase and more dissent

Split votes have been common this year. In the first half of 2026 most dissenters wanted lower rates, although three objected in April to an easing bias in the statement. Since July, every dissenter has wanted a higher rate.

Hammack has now voted against the committee's decision three times this year: in April, when she supported holding the rate but objected to an easing bias in the statement, and in July and October, when she wanted an increase. Cook had not dissented at any earlier meeting this year.

What it means for borrowers and savers

The Fed also left its own lending and deposit rates for banks where they were. According to the implementation note, the Board kept the interest rate it pays on banks' reserve balances at 3.90%, effective October 29, and approved keeping the primary credit rate, which is charged on discount window loans, at its existing level of 4.0%.

In the Fed's daily figures for October 26, published on October 27, the effective federal funds rate was 3.88%, inside the target range, and the bank prime loan rate was 7.00%. The prime rate is the rate posted by a majority of the 25 largest insured U.S.-chartered commercial banks, and the Fed's H.15 release describes it as "one of several base rates used by banks to price short-term business loans." Yields on short-term Treasury bills in the secondary market ranged from 3.94% (4-week) to 4.26% (1-year) that day.

The inflation backdrop

The latest consumer price figures, for September, showed prices 3.7% higher than a year earlier, up from 3.4% in August, the Bureau of Labor Statistics reported on October 14. Gasoline rose 9.1% in the month and accounted for over half of the monthly increase. Prices excluding food and energy were up 2.6% over the year. Our report on September prices has the details.

The October figures are due on Tuesday, November 10, 2026. The committee's next meeting is on December 8-9, one of the meetings at which members publish a Summary of Economic Projections, according to the Fed's meeting calendar.