Fed holds rates at 3.75%-4% in 10-2 vote; Cook and Hammack dissent in favour of a hike

The US Federal Reserve kept the target range for the federal funds rate at 3.75% to 4% at 18:00 GMT on Wednesday 28 October, at the end of its two-day Federal Open Market Committee (FOMC) meeting. The range has been in place since a quarter-point increase in September, according to CNBC.

The statement was approved by a 10-2 vote. Governor Lisa Cook and Cleveland Fed President Beth Hammack voted against, preferring to raise the range by a quarter percentage point, the Fed said. CNBC reported it was Cook’s first dissent since she joined the Fed in 2022.

“Economic activity is expanding at a strong pace,” the statement said, adding that “inflation remains elevated” and 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.” Axios noted the September statement had described the pace as “solid”.

At his press conference, Chair Kevin Warsh said financial and credit conditions “have tightened for some businesses and households, much as we would expect” since the September increase, CNBC reported.

As of 18:43 GMT, with trading still under way, the S&P 500 was up 0.45%, the Dow Jones Industrial Average up 0.37% and the Nasdaq Composite up 0.39%, according to Yahoo Finance data. Fed funds futures implied a roughly 85% chance of a December increase, CNBC reported, citing CME FedWatch.

See also: Fed, ECB, Bank of Japan, Bank of Canada and RBNZ all announce rate decisions this week.