Fed holds rates at 3.75%–4% in 10–2 vote as Cook and Hammack push for a hike

The Federal Reserve held its benchmark federal funds rate in a range of 3.75% to 4% on Oct 28, its last decision before the Nov 3 US midterm elections. The Federal Open Market Committee, the Fed's rate-setting panel, voted 10–2, with Governor Lisa Cook and Cleveland Fed President Beth Hammack dissenting in favor of a quarter-point increase.

The hold follows a quarter-point hike at the September meeting, the Fed's first rate increase since 2023.

The statement

"Inflation remains elevated," the statement said, adding that "the accumulation of more information" will help the committee set policy to return inflation to its 2% goal. It closed with the same line as in September: "The Committee will deliver price stability."

The statement described economic activity as "expanding at a strong pace," up from "solid" in September, and dropped the sentence that explained the September hike. US consumer prices rose 3.7% from a year earlier in September.

The dissents

The vote was Cook's first dissent since she joined the Fed's board in 2022. Fortune reported it was the first time a Fed governor and a regional Fed president dissented on the same side since October 1992.

President Donald Trump has tried to remove Cook from office, and CNBC reported that a hearing in that effort is scheduled for early November. Dallas Fed President Lorie Logan and Minneapolis Fed President Neel Kashkari, who dissented alongside Hammack at the July hold, voted with the majority.

Warsh on the meeting schedule

Chair Kevin Warsh said at his press conference that the committee will keep eight meetings a year but will not vote on rates at all of them. Starting in 2027, one meeting a year will be devoted only to broad monetary policy strategy. In 2028, two meetings will focus on strategy and six on setting policy.

Warsh said the "monetary medicine" applied so far "is starting to work some, but there is no firm conclusions." He repeated that he does not favor forward guidance, the practice of signaling the future path of rates, outside a crisis.

Borrowing costs and markets

Before the decision, traders put the odds of a hike at the December meeting at 78%, according to CME Group's FedWatch tool. The 2-year Treasury yield, which is sensitive to Fed policy, traded at 4.714% after Warsh's press conference, CNBC reported.

The prime rate that banks charge as the benchmark for most credit cards, home-equity lines and adjustable-rate loans rose to 7% on Sept 17, after the September hike. The hold leaves the federal funds range that set that move unchanged.

What comes next

• The September reading of the personal consumption expenditures price index, the Fed's preferred inflation gauge, is due on Oct 29.
• US midterm elections take place on Nov 3, with control of Congress at stake.
• The Federal Open Market Committee next meets on Dec 8–9, a meeting that comes with officials' updated economic projections.