Fed holds rates 10-2; Cook and Hammack vote for a hike
The FOMC kept its target range at 3.75% to 4.00% and dropped its September line about a timelier return to 2% inflation. Two officials wanted another quarter-point increase.
By American Policy WireFiled
The bottom line A hold with two votes for a hike and no promise about December keeps the risk of higher rates alive for buyers already facing 30-year averages above 7%.
The Federal Reserve left its benchmark rate unchanged on Wednesday, keeping the federal funds target range at 3.75% to 4.00% on a 10-2 vote [1]. Lisa D. Cook and Beth M. Hammack dissented, preferring another quarter-point increase [1].
Why it matters: The Fed does not set mortgage rates, but a committee with two votes for a hike and no commitment on December leaves borrowers without a clear signal that relief is coming. The 30-year fixed average was 7.32% in Freddie Mac’s latest survey, more than a full point above a year earlier [5, 7].
How we got here: On September 16 the committee raised the range a quarter point, 12-0, saying the move “will support a timelier return” to its 2% goal, as we reported that day [4]. That line is gone. In its place, Wednesday’s statement says “the accumulation of more information will help the Committee determine the policy stance appropriate” to bring inflation back to 2% [1, 4]. The statement also upgraded its description of growth: activity is now expanding at a “strong” pace, where September said “solid” [1, 4].
By the numbers
- 3.75% to 4.00%: The federal funds target range, unchanged [1].
- 3.90%: The interest rate on bank reserves, held steady effective Oct. 29; the discount window’s primary credit rate stays at 4.0% [2].
- 7.32% and 6.68%: Freddie Mac’s 30-year and 15-year fixed averages on Oct. 22, down from 7.40% and 6.71% a week earlier [5, 6]. A year earlier they were 6.19% and 5.44% [7].
- 5.05%: The 10-year Treasury yield at Wednesday’s close, up from 4.99% on Tuesday but below the 5.21% of Oct. 13 [8].
- 4.67%: The 2-year Treasury yield at Wednesday’s close, down from 4.70% on Tuesday [8].
What did Warsh say about borrowing costs? Chair Kevin Warsh said that since September, financial and credit conditions “have tightened for some businesses and households, much as we would expect” [3]. He added that he was “unwilling and unable to call them tight” [3]. He pointed to prices: energy and related costs “have moved higher again in recent weeks,” and inflation has run above the Fed’s objective “for close to 6 years” [3].
On growth, Warsh said “economic growth has strengthened.” He said first-half GDP growth was revised up to 2.4% from an earlier 1.8%, and that third-quarter consumer spending was likely running above 3% growth, with business investment rising at about a double-digit pace [3]. The jobless rate is lower than a year ago, he said [3].
A reporter asked whether rates matter less now that so much growth comes from technology investment rather than from rate-sensitive sectors such as housing. Warsh rejected that view: “Interest rates get in the cracks, interest rates affect directly or indirectly, almost everything” [3].
He also announced a schedule change. The FOMC will keep eight meetings a year, but one meeting in 2027 will focus only on broad strategy, with no rate vote or statement anticipated; he expects two such meetings in 2028 [3].
What it means for buyers and owners:
- Mortgage rates had already eased before the vote. The 30-year average slipped 8 basis points in the week to Oct. 22, after two straight weeks at 7.40% [5, 6]. Thursday’s survey will be the first taken after the decision.
- Long-term yields matter more than the hold. Mortgage rates tend to track the 10-year Treasury, which ended Wednesday above 5% [8].
- The Fed’s mortgage bonds keep running off. The New York Fed’s trading desk will keep reinvesting principal from agency securities, which include mortgage-backed securities, into Treasury bills rather than new mortgage bonds [2]. Warsh said a task force’s balance sheet recommendations will probably reach the committee early in the first quarter, adding “don’t hold me exactly to that timing” [3].
What’s next: Freddie Mac releases its weekly survey Thursday, Oct. 29. The FOMC’s last scheduled 2026 meeting is Dec. 8-9 [9], and Warsh declined to preview it: “I also don’t believe in prejudging meetings” [3].
The other side: A New York Times reporter told Warsh most of his colleagues “seem to be on board with raising rates in December” and asked why not raise rates now [3]. Warsh answered that bringing down inflation “is not about some fixed individual date on a calendar,” and conceded that the Fed has not achieved price stability: “you’re right about that. But we’re working on it” [3]. Cook and Hammack, by their votes, wanted the next step taken Wednesday [1].
Q&A Quick answers
- Q1Did the Fed raise interest rates in October 2026?
- No. The FOMC voted 10-2 on Oct. 28 to keep the federal funds target range at 3.75% to 4.00%, where the September hike had put it [1, 4].
- Q2Who dissented at the October 2026 Fed meeting?
- Lisa D. Cook and Beth M. Hammack. Both preferred raising the range by a quarter point [1].
- Q3What are mortgage rates after the October 2026 Fed meeting?
- Freddie Mac's most recent survey, from Oct. 22, put the 30-year fixed at 7.32% and the 15-year at 6.68%; that reading came before the decision [5]. The first weekly average taken after it is due Thursday, Oct. 29.
- Q4Will the Fed raise rates in December 2026?
- The Fed did not say. Chair Kevin Warsh said he does not believe in forward guidance in ordinary times or in prejudging meetings [3]. The committee next meets Dec. 8-9 [9].
- Q5Is the Fed changing how often it meets?
- Warsh said the FOMC will keep eight meetings a year, but one in 2027 will cover strategy only, with no rate vote or statement expected, and he expects two such meetings in 2028 [3].