On October 28, 2026, the Federal Open Market Committee voted 10-2 to hold the federal funds rate target range at 3.75% to 4.00%. Inflation remains elevated; two members preferred a 25-basis-point hike. Finance teams should treat the pause as data-dependent rather than a pivot and update borrowing-cost assumptions for the December meeting this week.
The Federal Reserve left the federal funds rate unchanged at 3.75%–4.00% on October 28, 2026, signaling that further information is needed before any move to address still-elevated inflation. The decision was by a 10-2 vote. Governors Lisa D. Cook and Cleveland Fed President Beth M. Hammack preferred a quarter-point increase. Chairman Kevin Warsh described economic activity as expanding at a strong pace while noting that inflation remains elevated. The interest rate paid on reserve balances stays at 3.90%.
What changed?
The FOMC maintained the target range for the federal funds rate at 3.75% to 4.00% by a 10-2 vote; two members dissented in favor of a hike.
When?
Decision announced at 2:00 p.m. EDT on October 28, 2026; implementation effective October 29.
Who is affected?
Corporate treasury teams managing floating-rate debt, commercial real-estate borrowers, and finance groups forecasting 2027 interest expense.
What to do this week?
Refresh interest-rate sensitivity analyses and confirm that any December meeting scenarios include both a hold and a 25-basis-point hike.
What did the Federal Reserve decide on October 28?
The Federal Open Market Committee decided to maintain the target range for the federal funds rate at 3-3/4 to 4 percent. The vote was 10 to 2. The Committee noted that economic activity is expanding at a strong pace, productivity growth is strong, and capital investment is robust. Job gains have kept pace with the workforce. Inflation, however, remains elevated. The Board of Governors voted unanimously to keep the interest rate paid on reserve balances at 3.90 percent, effective October 29, 2026.
The statement upgraded language on economic activity from “solid” in the prior meeting to “strong.” Standing overnight repurchase operations remain at 4.0 percent and reverse repurchase at 3.75 percent, with a per-counterparty limit of $160 billion per day. The primary credit rate stays at 4.0 percent. Chairman Warsh’s opening statement noted that GDP growth in the first half of the year was revised higher and that third-quarter activity appears even stronger, led by resilient domestic spending. Inflation has remained above the 2 percent goal for an extended period. The next meeting is scheduled for December; minutes of the October meeting are due November 18.
Why did two members dissent?
Lisa D. Cook and Beth M. Hammack preferred to raise the target range by 1/4 percentage point. Their dissent indicates that a subset of the Committee sees inflation as requiring more immediate action. Chairman Warsh’s press conference emphasized that the accumulation of more information will help determine the appropriate policy stance to return inflation to the 2 percent goal. The statement does not contain a clear bias toward either a hike or a cut at the December meeting.
What does the hold mean for borrowing costs?
The overnight rate remains in the 3.75%–4.00% range. Standing repo operations continue at 4.0 percent and reverse repo at 3.75 percent. For corporate borrowers, the immediate effect is stability in short-term rates rather than relief. Longer-term Treasury yields will continue to reflect market expectations for the path of policy, inflation, and fiscal developments. Finance teams with floating-rate facilities should not assume the pause will last through year-end.
What should finance operators do this week?
Update internal rate forecasts to include both a continued hold and a 25-basis-point hike at the December meeting. Re-price any commercial-paper or revolver draws against the current SOFR curve. Review covenant headroom on facilities that contain interest-coverage tests. Communicate the data-dependent stance to business-unit leaders who have been modeling rate relief. Monitor the September PCE and upcoming employment data for signals that could shift the December outcome.
What to watch next
The next FOMC meeting is in December. Between now and then the Committee will receive additional inflation and labor-market readings. Midterm elections on November 3 may affect market risk appetite but do not change the Fed’s dual mandate. Any further dissents or shifts in the summary of economic projections will be closely watched. Corporate issuers planning bond deals should factor in the possibility of a tighter policy stance into 2027.
The Board of Governors voted unanimously to keep the interest rate paid on reserve balances at 3.90 percent. Markets will watch the September PCE inflation reading and the next employment report for clues on the December meeting. Corporate issuers with floating-rate exposure should model both a continued hold and a 25-basis-point hike; longer-term Treasury yields will continue to price in the path of inflation and fiscal developments rather than the overnight rate alone.
What rate did the Fed hold?
The target range for the federal funds rate remains 3.75% to 4.00%.
How many members voted to hold?
The decision passed 10-2; Cook and Hammack preferred a 25-basis-point increase.
Did the Fed change the reserve-balance rate?
No. The interest rate paid on reserve balances stays at 3.90%, effective October 29, 2026.
Is a December hike likely?
The statement emphasizes the need for more information. Markets and operators should treat both a hold and a hike as live possibilities.
How does this affect corporate borrowing?
Short-term rates are unchanged. Floating-rate debt costs remain tied to the current SOFR environment; longer-term costs depend on the path of expected policy.
Last Updated: October 31, 2026.
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