The Federal Reserve held its benchmark interest rate at 3.75% to 4% on Wednesday, Oct. 28, 2026, and Chair Kevin Warsh used his press conference to lay out why: growth is running faster than expected, but inflation “is too high.” Long-term Treasury yields rose after the decision, while futures traders raised their bets on a December rate hike, Reuters reported. This report covers what Warsh said about the economy, the technical rates the Fed set, how markets reacted and what it means for borrowers in Massachusetts. For the vote and statement, see our full Fed decision story.
Key numbers, Oct. 28
- 3.75%–4.00% fed funds range, unchanged; vote 10–2
- 3.90% interest on reserve balances; 4.0% discount (primary credit) rate
- 5.044% 10-year Treasury yield at close, up 0.052 pt
- 85% futures-implied odds of a December hike (CME FedWatch, via Reuters)
- 7.32% average 30-year mortgage rate (Freddie Mac, Oct. 22)
- Dec. 9 next decision, 2 p.m. ET
Warsh’s Case: Strong Growth, Inflation Too High
In his opening statement, Warsh said the committee assesses the economy “by looking out the window—it’s what we call ‘interrogating reality.'” He pointed to growth data: first-half gross domestic product growth was revised up “from an earlier estimate of 1.8 percent up to 2.4 percent,” and the third quarter “appears to have brought an even more rapid advance,” with consumer spending “likely running above 3 percent growth” and business investment “likely rising at about a double-digit pace.”
On jobs, he said “the jobless rate is lower than a year ago, and payroll growth is noticeably above last year’s pace,” adding that “on the employment side of the Fed’s dual mandate, conditions are quite positive.”
Inflation was the focus. Warsh said Americans “are still dealing with inflation that has been running above the Committee’s objective for close to 6 years,” and that “the FOMC’s discussion over the last couple of days focused mainly on the price stability side of our remit.” He said “energy and related prices have moved higher again in recent weeks,” and that the Fed’s job is to ensure “relative price changes in some sectors do not broaden out across the economy.”
On financial conditions since the September rate increase, he said they “have tightened for some businesses and households, much as we would expect,” but added: “I’m unwilling and unable to call them tight.” He also said the committee has “made clear our readiness to act as circumstances require.”
The Fed’s Technical Rates for Oct. 29
The Fed’s implementation note kept its administered rates steady, effective Oct. 29. The Board voted unanimously to keep interest on reserve balances at 3.90% and the primary credit rate at 4.0%. The New York Fed’s trading desk was directed to run standing overnight repurchase operations at 4.0% and overnight reverse repurchase operations at 3.75%, with a per-counterparty limit of $160 billion a day.
On the balance sheet, the directive tells the desk to roll over all maturing Treasury holdings at auction and reinvest principal from agency securities into Treasury bills. It also directs purchases of Treasury bills “when appropriate” to “maintain an ample level of reserves.”
A Change to the Meeting Schedule
Warsh also announced that one 2027 meeting “will focus exclusively on broad monetary policy strategy, with neither a vote on the federal funds rate nor a policy statement anticipated.” He said he expects two strategy meetings and six policy-setting meetings in 2028. He called the meeting schedule “an institutional choice, affecting the nature and the quality of our deliberations.”
How Markets Reacted
Stocks ended slightly higher. The S&P 500 rose 0.28% to 7,743.98, the Dow Jones Industrial Average gained 0.19% to 52,475.10 and the Nasdaq Composite added 0.27% to 26,549.85, MarketWatch reported.
Bonds moved in different directions. The two-year Treasury yield slipped to 4.731%, falling during the press conference as Warsh declined to prejudge December. The 10-year yield rose 0.052 percentage point to 5.044%, its largest gain since Sept. 28, and the 30-year rose to 5.360%, according to MarketWatch. The dollar ticked down after Warsh’s comments.
Futures priced an 85.0% chance of a quarter-point hike in December, up from 78.3% on Tuesday, according to CME’s FedWatch tool as cited by Reuters. “The Fed didn’t throw any curveballs,” Ryan Detrick, chief market strategist at Carson Group, told Reuters. CNBC reported that markets had priced less than a 10% chance of a hike at this meeting.
What the Hold Means for Massachusetts Borrowers
Mortgage rates don’t follow the fed funds rate directly. They track longer-term Treasury yields more closely, and the 10-year yield rose after Wednesday’s decision. Freddie Mac’s survey put the national average 30-year fixed rate at 7.32% as of Oct. 22, down from 7.40% a week earlier but up from 6.19% a year ago. The 15-year averaged 6.68%, according to Freddie Mac. Freddie Mac’s next weekly reading comes out Thursday.
Rates on credit cards, home equity lines and many small-business loans are tied more closely to the Fed’s benchmark. Those stay where they were after September’s increase, at least until Dec. 9. Data on Thursday, Oct. 29, including the September PCE price index and the advance estimate of third-quarter GDP, could shape expectations for that meeting.
Follow rates, inflation and New England data on our Federal Reserve tracker, and see the day’s market wrap in our Business Report.
Sources
- Federal Reserve: FOMC statement, Oct. 28, 2026
- Federal Reserve: Implementation Note, Oct. 28, 2026
- Federal Reserve: Chair Warsh press conference opening statement (preliminary transcript), Oct. 28, 2026
- Freddie Mac: Primary Mortgage Market Survey, Oct. 22, 2026
Additional sources
- MarketWatch: U.S. stocks up, Treasury yields mixed after Fed hold
- Reuters (via Financial Newsletter): Wall Street ends higher as Fed holds key rate steady
- CNBC: Fed holds rates steady despite concerns over inflation
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