Federal Reserve holds interest rates at 3.75%–4% after September increase

The Federal Reserve held its target interest rate at 3.75%–4% on October 28, 2026, according to its Federal Open Market Committee statement. The 10–2 decision keeps borrowing costs at their current benchmark level after a rate increase in September, as policymakers weigh elevated inflation against signs of slower hiring in the United States.

Lisa D. Cook and Beth M. Hammack voted against holding rates, the Fed said. Both preferred to raise the target range by a quarter percentage point at this meeting. The split shows that the question before officials was whether to increase rates again, following the previous month’s move, rather than whether to lower them.

Why the Fed held rates in October

Inflation remained elevated, the committee said. It cited heightened uncertainty partly linked to geopolitical developments and said more information would help it decide what policy stance would return inflation to its 2% goal. The statement did not set out a timetable for another rate change.

Inflation and jobs figures behind the rate decision

ABC News reported that the Fed raised rates by a quarter percentage point in September, its first increase in three years. The October decision leaves that increase in place. Higher interest rates can restrain spending and demand, but ABC noted that their effects on inflation typically take several months to appear. That lag is relevant to households and businesses facing borrowing costs while officials assess whether the earlier move is working.

Consumer prices rose 3.7% in September from a year earlier, a four-month high, according to Bureau of Labor Statistics figures cited by ABC. The annual rate was more than a percentage point above the Fed’s 2% target. ABC reported that rising fuel prices amid unrest in the Middle East contributed to the acceleration.

The labor picture was less clear-cut. Employers added 29,000 jobs in September, down from 162,000 in August, according to the labor data cited by ABC. The slowdown complicates a decision to raise rates further: tighter policy may ease price pressure by cooling demand, but it can also weigh on growth and employment.

ABC also reported that Deutsche Bank Research viewed the approaching midterm elections as a possible factor in a decision to hold rates, though the bank said they would not be a primary consideration. The Fed’s statement did not identify the election as a reason for its vote.