Fed holds rates at 3.75%-4.00% on October 28 — both dissenters wanted a hike, and markets now price a December 9 increase

The hold was expected. The direction of the dissent was not. The US Federal Reserve kept its target range for the federal funds rate at 3.75%–4.00% on October 28, 2026, announcing at 2:00 p.m. Eastern time (3:00 a.m. on October 29 in Seoul). The vote was 10 to 2.

Both dissenters, Governor Lisa Cook and Cleveland Fed President Beth Hammack, wanted a quarter-point hike. Every vote against the decision argued for tighter policy, none for easing. Markets read that as a signal for the next meeting: futures pushed the odds of a hike on December 9 to roughly 85%.

1. What the Fed decided on October 28

The Fed raised rates by 25 basis points on September 16, its first increase since July 2023, in a unanimous vote. This meeting, six weeks later, was meant to gauge how that hike was landing. Chair Warsh told reporters that "monetary medicine is starting to work," with the September move feeding into credit and asset prices.

Two members disagreed that there was time to wait. Warsh called the meeting "a heck of a family fight," and described it as a serious, sober discussion.

2. What the two dissenters argued — hike now

Their concern is inflation. When Hammack explained a dissent in May, she said inflation pressures were broad-based and that energy was driving up prices, and she was not confident inflation would return to 2% on its own. Cook's vote is the more unusual one. Board governors tend to vote with the chair, and she had not dissented on a rate decision before.

The numbers they could point to:

Prices point up, jobs point down. The majority wanted more time to see the September hike work; the two dissenters wanted to act before inflation sets in. The split was about timing, not direction. No one argued for a cut.

3. What changed in the statement

The September statement said that day's hike would support a more timely return to 2%. That sentence is gone, replaced by a line about gathering more information. Warsh repeated that he does not believe in forward guidance outside a crisis. He did say inflation is "too high" and that the 2% goal is measured by the PCE index, with no softer implicit target.

He also noted that business investment is "not just strong, but it is broadening," and said he had once doubted that rates affect AI investment but now thinks they do. The scale of that investment was visible hours later in Microsoft and Alphabet results: Alphabet alone spent $51.4 billion on capital expenditure in the third quarter.

4. Market reaction — attention shifts to December 9

Before the meeting, December hike odds sat around 73–79%, as covered in 「FOMC 10월 28일 금리 결정 — 동결 확률 90% 넘는데 시장이 12월 9일을 보는 이유」. With both dissents pointing toward a hike, they moved to about 85%. Short-term yields eased while long-term yields rose, a sign that markets see inflation staying high even with policy on hold.

Why it matters for Korea. The Bank of Korea held its own rate at 3.00% on October 22 (「한국은행 기준금리 3.00% 동결 (10월 22일)」). The gap between US and Korean policy rates is 1.00 percentage point using the US upper bound. A December Fed hike would widen it to 1.25 points, which tends to pressure the won as capital seeks higher US yields. The Bank of Korea meets next on November 26, before the Fed.

5. What comes before December 9

Warsh said politics played no role, though the meeting came six days before the midterms. The December meeting comes after the election and after October inflation data. The minutes will show how many of the ten who voted to hold were close to joining the dissenters (「FOMC 의사록이란」).

6. What remains open and unverified

• Dissent rationale: No dedicated statement from Cook or Hammack on this vote was found. Hammack's reasoning here draws on her May explanation.
• December odds: The 84–85% figures come from one compilation and will keep moving.
• Energy and oil figures: Energy CPI of 20.4% and WTI at $102.78 were confirmed in one source only.
• October inflation: The biggest input for December, not known until November.