Federal Reserve Watch: Latest Decision, Statements and What Comes Next

October 29, 2026 | ATN Trade & Finance

The Federal Reserve held its benchmark interest rate steady at its October meeting — but the decision was anything but unanimous, and the statement language, the dissents, and Chair Kevin Warsh's press conference left little doubt that the Committee is leaning toward moving again in December. Here is a full account of what was decided, what was said, and what comes next.

The Decision: Hold at 3.75%–4.00%, 10-2

The Federal Open Market Committee voted on October 28 to maintain the federal funds target range at 3.75% to 4.00%. The vote was 10-2 — the closest split the Committee has produced in this tightening cycle. Two members voted for an immediate 25-basis-point hike: Governor Lisa Cook, in her first dissent since joining the Board of Governors, and Cleveland Fed President Beth Hammack. Both preferred to act now rather than wait. Their dissent puts names and urgency to what had been a more diffuse concern about whether the September hike was sufficient.

The October hold follows the Committee's September decision to raise rates 25 basis points — the first increase since July 2023. The September move brought the target range to its current level and represented a meaningful shift in the Committee's posture: after months of discussion about rate cuts, the Fed tightened instead. October's pause was presented as information-gathering rather than a signal that the work is done.

What the Statement Said

The October statement included a notable upgrade to the Committee's description of the economy. Economic activity, the statement said, "is expanding at a strong pace" — a step up from September's "solid." The upgrade reflects strong productivity growth and capital investment, and a labor market that has kept pace with workforce expansion without overheating. The unemployment rate was described as little changed.

On inflation, the language remained sober: "inflation remains elevated." The Committee said it wants an "accumulation of more information" before determining the appropriate stance for a "timely return of inflation" to its 2% goal. The phrase "accumulation of more information" is deliberate — it signals that a single data point will not be sufficient to move the Committee one way or the other, and that the December meeting will be judged against a body of evidence rather than a single print.

What Warsh Said

Chair Warsh's press conference was notable for what he confirmed, what he declined to say, and one moment of uncharacteristic directness. On inflation, he said the Fed has run above its 2% target for close to six years: "It's our responsibility to get inflation down." He described the 2% PCE target as non-negotiable — "there is no soft or implicit inflation target" — and said the Committee "owns it." He acknowledged the goal has not yet been met: "you haven't achieved price stability, you're right about that. But we're working on it."

On December, Warsh declined to commit or forecast. When a reporter noted that most colleagues appeared to favor a December hike, Warsh said the coming period would be "information rich" and pushed back on the idea that the calendar drives policy: "Quashing inflation is not about some fixed individual date on a calendar." He characterized financial and credit conditions as having tightened for some businesses and households since September, though he stopped short of calling overall financial conditions tight.

Asked about the midterm elections — the October 28 decision came days before the November midterms — Warsh was categorical: "Politics played no role in the decision" and was not discussed at the meeting.

One structural change Warsh announced: beginning next year, the FOMC will hold eight meetings annually, with one 2027 meeting designated for broad strategy review and no rate vote. In 2028, two such strategy meetings will occur. The implication is that fewer scheduled votes could increase the possibility of intermeeting moves in future cycles, though no such action was signaled for the current period.

The Data Behind the Decision

The October decision was shaped by a run of data that gave the Committee neither comfort nor alarm. September CPI came in at 3.7% annually. September PCE — released October 29, the day after the meeting — showed headline inflation at 3.6% year over year and core PCE at 3.1%, both up from August and consistent with the Fed's concern that disinflation has stalled. Q3 GDP grew at a 3.4% advance rate, above consensus, suggesting the economy remains too strong for inflation to cool on its own. The personal savings rate fell to 3.8% from 4.0% in August, indicating consumers are drawing down reserves to sustain spending — a pattern that can keep services inflation sticky.

Oil remains a complicating factor. WTI is near $102 per barrel and Brent near $114. Warsh, asked whether a hypothetical oil price decline would change policy, declined to engage with the hypothetical but noted the recent decoupling: oil has risen on geopolitical pressures while market interest rates have fallen — "until very recently," he said. The implication is that sustained elevated energy prices are part of the inflation calculus, not separate from it. The 30-year fixed mortgage rate ticked up to 7.35% following the announcement, according to Mortgage News Daily.

What December Looks Like

Before Thursday's September PCE release, CME FedWatch put the probability of a 25-basis-point hike at the December 8-9 meeting at approximately 82.6% to 84.6%, up from 78.3% the prior session. After the September PCE came in at 3.6% — in line with expectations but at a still-elevated level — the probability trimmed to 79.6%. That remains a strong consensus.

Expert views range from confident to cautious. Goldman Sachs Asset Management's Kay Haigh expects the Fed to "resume rate hikes in December." KPMG Chief Economist Diane Swonk advises readers to "brace for a hawkish lean." Melissa Cohn of William Raveis Mortgage said the Fed is "very likely" to raise rates in December if inflation does not improve. The more cautious read comes from Principal Asset Management's Seema Shah, who said the Fed has "room to wait for more data" because inflation expectations remain anchored. Danielle Hale of Realtor.com puts it in structural terms: investors now expect two to three more hikes over the next six to eight months, more than the Fed itself has projected. Markets are currently pricing three additional hikes in 2027.

At September's meeting, most participants had projected another hike by year-end. Warsh has said he wants to eliminate forward guidance as a policy tool — a preference that makes each meeting more genuinely data-dependent and each press conference less predictable. The December 8-9 meeting will be preceded by November CPI (released December 10), which will arrive after the meeting rather than before it. The data available to the Committee will include October CPI, October PCE, and two more labor market reports.

What this means: For importers, exporters, and supply chain operators, the October FOMC decision changes nothing about the cost of capital — rates are unchanged, and the December meeting is live but unresolved. What it does is extend the period of high-rate uncertainty into at least mid-December. Borrowing costs for inventory financing, trade credit, and capital expenditure should be modeled at current levels or slightly above through year-end, with the base case being one more 25-basis-point move in December. The two dissents — Cook and Hammack — are a signal that the hawkish end of the Committee is asserting itself. Warsh's refusal to endorse December explicitly is characteristic of his stated preference for genuine data-dependence over guidance, but it does not change the probability distribution. At 79.6%, the market has largely made up its mind about December. The Fed's job now is to confirm or deny that bet with six weeks of data.

Sources:

Federal Reserve Watch: Latest Decision, Statements and What Comes Next

Federal Reserve Watch: Latest Decision, Statements and What Comes Next

Leave a comment

Your cart