Good newsFed Holds Rates at 3.75% to 4% as Growth Runs Strong
The Federal Reserve left its key rate unchanged on 28 October, with the economy expanding at a strong pace, spending resilient and jobs keeping up with the workforce. Two officials wanted a quarter-point rise.
Read the bad side of this story
Inflation at 3.7% Keeps Fed on Edge as Two Vote for Rises
The Federal Reserve kept its key interest rate at 3.75% to 4% on 28 October, a pause after September’s increase, and described an economy that is doing well. In its statement, the Fed said activity is expanding at a “strong pace”, domestic spending has been resilient, productivity growth is strong and capital investment is robust. Job gains have kept pace with the workforce, and unemployment has changed little. Borrowers get a breather: no new rise in the cost of credit this month.
A hold after a rise
Rates were raised in September on a 12 to 0 vote, the first increase since 2023, NBC News reports. This time the committee voted 10 to 2 to stand still. Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented, both preferring another quarter-point rise. It was Cook’s first dissent.
Markets took the decision calmly. CNBC reports that the S&P 500 held its gains after the announcement, and that the hold was widely expected.
| Item | What the sources say |
|---|---|
| Target range | 3.75% to 4% (unchanged) |
| Vote | 10 to 2; Lisa Cook and Beth Hammack wanted a quarter-point rise |
| September meeting | 12 to 0 to raise rates, the first rise since 2023 |
| Inflation | 3.7% in September, up from 3.4% in August (NBC News) |
| Activity | Expanding at a “strong pace” (Fed statement) |
| Q3 growth estimate | 3.4% annualised (Atlanta Fed GDPNow, via CNBC) |
Table: GoodBad. Data from the Federal Reserve statement, NBC News and CNBC, 28 October 2026.
Growth and productivity
The Atlanta Fed’s GDPNow tracker points to 3.4% annualised growth for the third quarter, according to CNBC. Strong productivity growth and robust investment are the features the Fed itself highlights. Chair Kevin Warsh said that “real activity is clearly pointing in the right direction,” as quoted by NBC News.
For households, the practical meaning is that a strong labour market is intact. The Fed says uncertainty remains elevated, partly because of geopolitical developments, but it did not report a rise in unemployment.
Fewer, sharper meetings
Warsh also set out a change in how the Fed works. CNBC reports that one 2027 meeting will focus only on strategy, with no rate vote or policy statement. NBC adds that the Fed will go from eight rate-setting meetings to seven next year. He said the change would improve the “quality” of decisions.
What comes next
Inflation is the open question. The Fed says it “remains elevated” and that it needs more information to set the stance that returns inflation to 2%. NBC reports inflation rose to 3.7% in September from 3.4% in August, and futures pricing cited by CNBC shows a strong chance of a December increase. Whether the strong economy can absorb that is the next test. For now, the central bank has paused.
