Fed holds rates at 3.75%–4%, with two officials voting for a hike

The US Federal Reserve (Fed) kept its benchmark rate unchanged on October 28, holding the target range for the federal funds rate at 3.75% to 4% in a 10–2 vote, according to its statement. The two dissenters wanted to raise rates. The Fed had raised the range by a quarter point in September.

What the Fed decided

The Federal Open Market Committee "decided to maintain the target range for the federal funds rate at 3-3/4 to 4 percent," the statement said. It was released at 14:00 EDT (18:00 UTC).

Both dissenters favored tighter policy. Cook and Hammack "preferred to raise the target range for the federal funds rate by 1/4 percentage point at this meeting," the statement said.

In a separate implementation note, the Fed's Board voted to keep the interest rate paid on reserve balances at 3.90%, effective October 29.

How the Fed sees the economy

The statement described a strong economy and stubborn inflation:

• "Economic activity is expanding at a strong pace."
• "Job gains have kept pace with the workforce, and the unemployment rate has changed little."
• "Inflation remains elevated."

The committee added that more information would help it decide the policy stance needed "to ensure a timely return of inflation to the Committee's 2 percent goal."

Why it matters

Two dissents in favor of a hike show that part of the committee sees a case for tighter policy. Before the meeting, the Bureau of Labor Statistics had reported that consumer prices rose 3.7% in the 12 months to September; our September CPI report has the details. The European Central Bank also held its key rates a day later, on October 29, with euro-area inflation at 3.8% in September, as our ECB report details.

What it could mean for traders

Higher expected rates tend to strengthen the dollar and weigh on assets that depend on cheap funding and risk appetite, including crypto. The October jobs report, published by the BLS on November 6, showed payrolls up 165,000. The BLS published the October CPI on November 10; the Fed's next decision is due at its December 8–9 meeting. On November 10, Governor Christopher Waller, who voted for the October hold, said he was leaning toward supporting an increase at that meeting; see our report on his speech.