Fed holds rate at 3.75–4 percent on a 10–2 vote, with two members wanting a hike

The US central bank (the Fed) on October 28 kept its benchmark rate at 3.75–4 percent. The decision was taken with 10 votes in favour and 2 against. Governor Lisa Cook and Cleveland Fed President Beth Hammack voted against because they wanted a quarter-point hike. The Fed chair is Kevin Warsh.

What the statement says. Inflation “remains elevated”. The description of economic growth was raised from “solid” to “strong”, and job gains keep pace with the workforce. In the checked reports it is not stated that the statement mentions oil prices, although commentators point to energy and the spike in diesel as a reason for concern about inflation.

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How markets reacted. The S&P 500 and Nasdaq rose about 0.2 percent after Warsh began speaking. The two-year Treasury yield fell 3.8 basis points to 4.7 percent, the ten-year rose 5 basis points to 5.042 percent and the thirty-year rose 6 to 5.367 percent. The dollar index fell 0.2 percent.

Our calculation. The Fed is at 3.75–4 percent and the ECB is at 2.5 percent. That is a gap of 1.25 to 1.5 percentage points. The ECB’s 2.5 percent is the rate before its October 29 meeting, which we wrote about earlier, so if the ECB changes it, the gap will change too.

What comes next. Analysts widely expect a hike at the December meeting. The exact date of the next meeting is not given in the checked report. The Fed also plans to reduce the number of policy meetings starting next year.

Why two voted against. The two members who wanted a hike see inflation as a bigger risk than slowing growth. That is an interpretation of their position from the vote, not their statement.

What is not known. It is not known whether a December hike is certain, or how long the tightening will last. It is also not published how the decision directly affects Macedonian loans, so we state no such assessment.

How to read the vote. The policy committee has 12 voting members, so 10–2 means everyone voted. The two who voted against did not want a hold but a hike, which is a sharper direction than the decision. The Fed sets the rate as a quarter-point range, so 3.75–4 percent means the upper and lower bounds remain unchanged.

The yield curve. According to the market figures, the ten-year yield of 5.042 percent is about 34 basis points above the two-year at 4.7 percent, and the thirty-year at 5.367 percent is another 32.5 or so points above the ten-year. That is our calculation and it means long-term borrowing is more expensive than short-term.

What does it mean? The Fed is not changing the rate, but the 10–2 vote shows pressure toward higher rates. The next signal is the December meeting and the inflation data until then.

MKNews Hub · Macedonia · October 29, 2026