Fed holds rates steady at 3.75%-4.00% in 10-2 vote with two hawkish dissents; December hike now in focus
What happened
The Federal Reserve held its benchmark federal funds rate steady at 3.75%-4.00% on Wednesday, October 28, 2026, exactly as markets expected. The vote was 10-2, with Governor Lisa Cook and Cleveland Fed President Beth Hammack dissenting in favour of a quarter-point increase — a hawkish signal that the committee's centre of gravity still leans toward tightening. The statement upgraded its description of activity to expanding 'at a strong pace' (from 'solid pace' in September), said job gains have kept pace with workforce growth and unemployment has changed little, and noted uncertainty remains elevated partly owing to geopolitical developments. In his 2:30 p.m. ET press conference, Chair Kevin Warsh said inflation expectations are 'going the right way' but stressed it is the Fed's responsibility to get inflation down, while declining to call financial conditions tight. Stocks barely budged: the Dow and S&P 500 held gains of roughly 0.1-0.2% while the Nasdaq slipped about 0.2%, and the 10-year Treasury yield ticked up to about 5.03-5.05%.
Why it matters & what’s next are part of Pro, along with the audio summary.
Start your free 14-day trialWho’s affected
- Broad market (S&P 500, Nasdaq, Dow): muted immediate reaction — S&P 500 and Dow up about 0.1-0.2%, Nasdaq slipping about 0.2% after the decision
- Treasury yields: 10-year rose to about 5.03-5.05% from 5.02% just before the announcement and 4.99% at Tuesday's close; 2-year up to about 4.78%
- Rate-sensitive growth and megacap tech: Alphabet up nearly 1% and Microsoft down about 0.5% in afternoon trading ahead of their after-close earnings; Nasdaq turned lower on the hawkish tilt
- Banks and duration-sensitive sectors (real estate, small caps): Russell 2000 flipped from +0.2% to about -0.3% after the decision as hike odds for December stayed high