Fed Holds at 3.75% to 4% on a 10-2 Vote as Cook and Hammack Dissent in Favour of a Hike
Chair Kevin Warsh gave little away after the Federal Reserve held rates for the first time since September's increase, and futures still point to a December hike.
Wednesday, October 28, 2026/2 min read
The Federal Reserve left its benchmark rate at 3.75 to 4 percent on Wednesday, as markets expected, but the vote told a harder story. Two members of the committee wanted a quarter-point increase, according to Reuters: Governor Lisa Cook, in her first dissent on a policy decision, and Cleveland Fed President Beth Hammack. The tally was 10 to 2.
The hold came a month after the rate rise that Chair Kevin Warsh's committee delivered in September, and it closed the central-bank leg of a week we previewed in our week-ahead guide. Stocks finished higher.
What did the Fed statement say?
The statement said inflation "remains elevated" and described the economy as growing at a strong pace, Reuters reported. It added that the Committee will deliver price stability. The Globe and Mail read the wording as leaving the door open to further hikes if inflation does not improve.
Inflation is running about a percentage point above the 2 percent target and has made little progress recently, Reuters noted, and the Fed has now missed its goal for more than five years.
What did Warsh say at the press conference?
He gave little guidance. Warsh acknowledged that price stability has not been achieved, saying of the effort, "We're working on it," and declined to preview December, noting that a lot can happen before then, the Globe and Mail said. He told reporters he is confident inflation can return to 2 percent without choking off growth, does not see the economy running too hot, and credited productivity gains that may predate the AI boom. He also said politics played no role in the decision, Reuters reported.
The next meeting is on 8 and 9 December, five weeks after the 3 November midterm elections.
How did markets react to the Fed decision?
Quietly. Per the Associated Press closing report on Yahoo Finance, the Dow rose 0.19 percent to 52,475.10, the S&P 500 gained 0.28 percent to 7,743.97 and the Nasdaq Composite added 0.27 percent to 26,549.85. Futures put the chance of a quarter-point hike in December at about 80 to 85 percent, depending on the report, with another likely by March, though conviction eased a little after Warsh spoke.
Earnings did most of the work. Of about 200 S&P 500 companies that had reported third-quarter results, 84 percent beat estimates, and analysts now expect earnings growth of 31.8 percent from a year earlier, the AP said. Oil climbed after Houthi attacks on a Saudi refinery. Longer-dated Treasury yields rose, according to Reuters. Vertiv jumped 16.5 percent after raising its forecasts and Micron added 5.9 percent, while Boston Scientific fell 5.8 percent on a lower profit outlook.
After the bell, Microsoft rose more than 4 percent and Alphabet fell more than 7 percent on their results, the AP reported, so the Fed's steady hand gave way at once to the week's biggest earnings test. The Fed's own next test comes quickly: Thursday brings the first estimate of third-quarter growth, which Warsh said he expects to show strong investment and consumer spending.
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