Latest Fed Decision: US Interest Rates Held, but Could Rise Again in December?
The US central bank, the Federal Reserve, kept its benchmark interest rate unchanged on Wednesday (28 October 2026). The decision came as inflation remains high and the central bank seeks more data to determine the next direction of monetary policy, including the possibility of an interest-rate rise in December.
Reuters reported on Thursday (29 October 2026) that the Fed held rates in a range of 3.75–4 per cent, in line with market expectations. In its latest statement, the central bank said inflation remained “elevated”, while the US economy was expanding at a “solid pace”.
Fed Chair Kevin Warsh said he remained confident inflation could be brought down towards the 2 per cent target without constraining economic growth or increasing unemployment.
“The economy is moving in the right direction. Is the economy running too hot? Is the economy growing too strongly? That is not the assessment of most of my colleagues,” Warsh said.
He argued that productivity changes, including those that took place before the artificial intelligence (AI) boom, could enable the US economy to grow faster without fuelling as much inflation as feared.
“In my view, the goal is not to put a brake on the economy and make people lose their jobs. I do not think we have to do that,” he said.
Warsh said higher interest rates had already tightened credit conditions. This could slow business investment and spending by higher-income households, helping to ease inflationary pressure.
Nevertheless, the Federal Open Market Committee (FOMC) statement left open the possibility of a subsequent policy adjustment once further information became available.
“The accumulation of additional information will help the Committee determine the appropriate stance of monetary policy to ensure that inflation returns to the Committee’s 2 per cent objective in a timely manner,” the FOMC said. “The Committee will deliver price stability.”
Two Fed officials—Governor Lisa Cook and Beth Hammack, president of the Federal Reserve Bank of Cleveland—dissented, preferring a 0.25 percentage-point increase. Cook’s dissent was her first in a central-bank monetary policy decision.
US Treasury Secretary Scott Bessent said the administration remained confident that Warsh would strike the right balance between the 2 per cent inflation target and economic growth. Michael Pearce, chief US economist at Oxford Economics, meanwhile, said the factors keeping the Fed inclined towards tight policy had not eased.