On Wednesday, October 28, the U.S. Federal Reserve announced that it would keep its target range for the federal funds rate unchanged at 3.75 to 4 percent, less than a week before the November 3 midterm elections. The decision came after a two‑day meeting that saw 10 of the 12 voting members support a pause while two favored a hike.
In a statement released by the Federal Open Market Committee, the Fed said economic activity was expanding at a strong pace and that domestic spending had remained resilient. The statement also noted that productivity growth was robust and that job gains had kept pace with the labor‑market supply, though the unemployment rate had changed little. Nevertheless, it emphasized that inflation remained elevated and that the Committee was committed to price stability.
"The Committee decided to maintain the target range for the federal funds rate at 3‑3/4 to 4 percent," the Fed’s statement read. It added that the Committee would keep “ample reserves in the banking system” and would continue to monitor economic data to guide future policy. The Fed also highlighted that “the accumulation of more information will help the Committee determine the policy stance appropriate to ensure a timely return of inflation to the Committee's 2 percent goal.”
Fed Chair Kevin Warsh said at a press briefing that inflation was still “too high” and that the Fed might pursue additional rate increases later in the year if inflationary pressures persisted. He warned that energy and related prices had moved higher again in recent weeks and that the Committee’s duty was to keep relative price changes from broadening across the economy. Warsh stressed, "It's our responsibility to get inflation down," he added, explaining that the FOMC’s discussions had centered on price stability.
Warsh also announced changes to the FOMC’s meeting schedule. He said that the Commission would still meet eight times a year but that in 2027 one meeting would focus exclusively on broad monetary‑policy strategy. The announcement came after the Fed’s decision to hold rates, which revealed divisions within the Committee: Cleveland Fed President Beth Hammack and Governor Lisa Cook had requested a 25‑basis‑point hike, while most members opted for a pause.
Market Reactions
The Fed’s announcement sparked modest gains in U.S. equity markets. The Dow Jones Industrial Average rose 97.53 points or 0.19 percent to 52,475.1, the S&P 500 added 21.38 points or 0.28 percent to 7,743.98, and the Nasdaq Composite gained 72.04 points or 0.27 percent to close at 26,549.85. Eight of 11 S&P 500 sectors finished in positive territory, led by technology and energy, while utilities and real estate slid modestly. Investors noted that the October pause set the stage for a potential late‑year rate increase, as liquidity in the markets remained firm.
Across the globe, South Korean stocks also moved higher on the day of the Fed’s decision. The Korea Composite Stock Price Index added 10.2 points or 0.17 percent to 6,022.64. The gains followed expectations for strong third‑quarter earnings from Samsung Electronics amid robust demand for memory chips. While the South Korean–U.S. interest‑rate gap remained up to one percentage point, the pause in U.S. policy provided some stability for international investors.
Financial analysts expected the Fed to harvest further data through December’s meeting before deciding on any future moves. PIMCO had projected a pause this month followed by a 25‑basis‑point hike in December. Market participants were watching closely for upcoming employment reports and an inflation print that would be released on November 1. The Fed’s decision to hold rates now keeps the policy tone cautious while it continues to monitor inflational forces and economic resilience.
