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Fed holds rates at 3.75%-4% after September's first hike since 2023

Fed holds rates at 3.75%-4% after September's first hike since 2023

Money Moves

Two officials wanted another quarter-point increase, and three regional Fed presidents now say more hikes are coming

6 days ago: Fed officials press the case for more rate hikes

Overview

Updated 3 days ago

The Federal Reserve held its benchmark rate at 3.75% to 4% on Oct. 28, a pause after September's quarter-point increase, the first hike since 2023. Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented, wanting another quarter-point increase.

Three regional Fed presidents said Oct. 30 that more increases are coming, with Dallas Fed President Lorie Logan calling for "at least two more 25-basis-point rate increases." The personal consumption expenditures price index, the Fed's preferred inflation gauge, rose 3.6% in the year through September, up from 3.4% in August. Traders price about a 75% chance of a hike at the Dec. 8-9 meeting.

Why it matters

A December hike would push mortgages, credit cards and business loans higher just as gasoline near $4.44 a gallon strains household budgets.

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Key Indicators

3.75%-4%
Federal funds rate target range
Held there on Oct. 28, six weeks after the Sept. 16 hike
10-2
FOMC vote to hold rates
Cook and Hammack dissented in favor of a quarter-point hike
3.7%
Consumer price inflation, year through September
Up from 3.4% in August, per NBC News
3.6%
PCE inflation, year through September
The Fed's preferred gauge, up from 3.4% in August; core PCE was 3.1%
~75%
Market odds of a December hike
Pricing for the Dec. 8-9 meeting, per CME FedWatch via EconoTimes on Nov. 2
7.0%+
Average 30-year fixed mortgage rate
Above 7% for more than a month as of Oct. 28, per Mortgage News Daily
$4.44/gal
Average US gasoline price
Up from $2.98 before the Iran war began in February
$6.40/gal
Record diesel price
Up 71% from a year ago, pushing up costs across the economy

Voices

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People Involved

Kevin Warsh
Kevin Warsh
Chair of the Federal Reserve
Held rates at 3.75%-4% on Oct. 28 and said the economy is not 'too hot'
 Donald Trump
Donald Trump
President of the United States
Pressing for rate cuts while his administration seeks to remove Governor Lisa Cook
 Lisa D. Cook
Lisa D. Cook
Federal Reserve Governor
Dissented in favor of a quarter-point hike on Oct. 28; Trump is seeking her removal from the board
 Beth M. Hammack
Beth M. Hammack
President, Federal Reserve Bank of Cleveland
Dissented in favor of a quarter-point hike on Oct. 28
 Lorie K. Logan
Lorie K. Logan
President, Federal Reserve Bank of Dallas
Called on Oct. 30 for at least two more quarter-point rate increases
 Alberto Musalem
Alberto Musalem
President, Federal Reserve Bank of St. Louis
Said on Oct. 30 that additional firming is necessary "and soon"
TB
Thomas Barkin
President, Federal Reserve Bank of Richmond
Said on Oct. 30 that the direction of travel for rates is "pretty straightforward"

Organizations Involved

Federal Open Market Committee (FOMC)
Federal Open Market Committee (FOMC)
Monetary policy body
Held rates at 3.75%-4% on Oct. 28; Cook and Hammack dissented in favor of a hike

The Fed's rate-setting committee. It held the federal funds rate at 3.75%-4% on Oct. 28 by a 10-2 vote.
Federal Reserve Board of Governors
Federal Reserve Board of Governors
Federal Agency
Approved related rate increases

The Fed's governing body, which voted unanimously to raise the rate paid on reserve balances and the primary credit rate.

Timeline

July 2023 October 2026

8 events Latest: 6 days ago
Tap a bar to jump to that date

  1. Fed officials press the case for more rate hikes

    Latest Monetary Policy

    Dallas Fed President Lorie Logan called for at least two more quarter-point increases, St. Louis Fed President Alberto Musalem said more firming is needed "and soon," and Richmond Fed President Thomas Barkin said the direction of travel is clear.

  2. Fed holds rates steady after September hike

    Monetary Policy

    The FOMC voted 10-2 to keep the funds rate at 3.75%-4%. Cook and Hammack dissented in favor of a quarter-point increase. Warsh also said the Fed will hold one strategy-only meeting a year starting in 2027.

  3. FOMC hikes rates 25 basis points

    Monetary Policy

    Unanimous 12-0 vote sets the funds rate at 3.75%-4%, the first hike since July 2023.

  4. August inflation data released

    Economic Data

    Fed's September projections show core PCE at 3.4% for 2026.

  5. June FOMC meeting flags rising price pressures

    Monetary Policy

    Officials wrestle with inflation made worse by energy costs; data since then gets more challenging.

  6. Iran war begins, oil supply disrupted

    Geopolitical

    US-Israeli war with Iran starts, sending energy prices climbing and raising inflation pressures.

  7. Fed ends year with three rate cuts

    Monetary Policy

    Cut rates three times in 2025 as inflation cooled, supporting economic growth.

  8. Fed makes its last rate hike before the pause

    Monetary Policy

    Raised rates to a 5.25%-5.5% range, the peak of the 2022-2023 tightening cycle.

Scenarios

1

Fed hikes again in December

Likely Resolves by Dec 16, 2026

Discussed by: Goldman Sachs Asset Management, CBS News, the FOMC's own projections

Sixteen of 18 policymakers expect at least one more hike in 2026, and Goldman's Kay Haigh calls December the base case, contingent on CPI reports and energy prices. Another quarter-point move would put the funds rate at 4%-4.25%.

2

Fed pauses in December as inflation cools

Possible Resolves by Dec 16, 2026

Discussed by: The two FOMC members who expect rates to hold; analysts watching oil prices

If the Iran war de-escalates and energy prices fall, headline CPI could drop quickly, giving the Fed cover to pause. The two policymakers who see rates stable argue the September hike is enough for now.

3

Energy prices collapse, Fed pivots to cuts by mid-2027

Uncertain Resolves by Q2 2027

Discussed by: Analysts at Goldman Sachs and deVere Group who tie the path of hikes to energy prices

A ceasefire in the Middle East would likely send oil prices down and pull inflation toward target. The Fed's own projections already show cuts returning in 2028, signaling officials see this tightening as temporary. Weak CPI prints plus falling fuel prices could pull that forward.

4

Housing Market Cools as Mortgage Rates Top 7%

Likely Resolves by End of 2026

Discussed by: Freddie Mac, real estate analysts

With 30-year mortgage rates above 7%, home sales and refinancing activity are expected to slow. Builders may cut back on new construction. The Fed's December decision will determine whether rates stay elevated.

Historical Context

3 moments from history that rhyme with this story — and how they unfolded.

1979-1980

Volcker-era oil shocks (1979-1980)

Oil price shocks drove US inflation to double digits. Fed Chair Paul Volcker raised rates to record highs, pushing the prime rate above 20%, and endured intense political pressure from the White House and Congress to stop.

Then

The economy fell into a deep recession in 1981-82.

Now

Inflation broke and stayed low for decades; Volcker's independence became the template for Fed chairs.

Why this matters now

The first energy-driven inflation crisis in which a Fed chair tightened against political pressure, the same dynamic playing out between Warsh and Trump.

March 2022 - July 2023

2022-2023 Fed tightening cycle

As pandemic-era stimulus met supply shocks, inflation hit a 40-year peak of 9.1%. The Fed hiked rates 11 times, from near zero to 5.25%-5.5%, the fastest tightening since the 1980s.

Then

Inflation cooled from the peak to around 3%-4%.

Now

Laid the basis for 2025 rate cuts that the Fed has now partly undone.

Why this matters now

Shows the scale of tightening the Fed is capable of; today's hike comes after a much smaller cut cycle, making it a partial reversal rather than a full new campaign.

2018-2019

Trump's pressure on Fed Chair Powell (2018-2019)

President Trump repeatedly attacked Fed Chair Jerome Powell, calling rate hikes 'crazy' and demanding cuts. The Fed hiked in December 2018 anyway, then cut three times in 2019 as growth slowed.

Then

Rates fell from 2.5% to 1.5%-1.75% over 2019.

Now

The episode cemented the norm that the Fed sets policy independently of the White House.

Why this matters now

A direct precedent for a president pressuring the Fed mid-cycle; Warsh's hike repeats the pattern of the chair resisting, though the economic backdrop now is inflation, not slowing growth.

Sources

(24)
+18
Reddit Federal Reserve Reuters CNBC Bloomberg MarketWatch CNN CBS News Euronews NPR BNN Bloomberg Reuters (via Investing.com) AP News Axios BBC News Reuters (via StreetInsider) EconoTimes NBC News Yahoo Finance Reuters Federal Reserve Federal Reserve CNBC NPR