Fed Holds Rates Steady as Inflation Stays Above 2% Target

October 29, 2026 | By Semahegn Nigatu

The US Federal Reserve kept its benchmark interest rate unchanged at 3.75 percent to 4 percent, as inflation remains above its 2 percent target despite resilient domestic spending and strong productivity growth.

The Federal Open Market Committee voted 10-2 to maintain the target range for the federal funds rate, saying it needed more economic data to determine the appropriate policy stance to bring inflation back to its goal.

Lisa D. Cook and Beth M. Hammack dissented, favouring a quarter-percentage-point increase in the benchmark rate.

The committee said economic activity was expanding at a strong pace, with domestic spending remaining resilient and capital investment robust. Productivity growth was also strong, while job gains had kept pace with workforce growth and the unemployment rate had changed little.

However, inflation remained elevated, and uncertainty persisted partly because of geopolitical developments, the Fed said.

The central bank said it would continue assessing incoming information to determine the timing and extent of any future policy adjustments, while maintaining ample reserves in the banking system.

The decision leaves borrowing costs unchanged as policymakers balance persistent inflation against economic activity and labour market conditions. The two dissenting votes in favour of a rate increase highlight differences within the committee over the appropriate response to inflation.

Source: FSX Business News