FOMC Holds Federal Funds Target Range as Two Members Dissent

The Federal Open Market Committee voted 10 to 2 on October 28, 2026 to maintain the target range for the federal funds rate at 3-3/4 to 4 percent, keeping the range at the level set at the Committee’s September meeting. The Committee approved the statement for release at 2:00 p.m. EDT, and the Federal Reserve issued an accompanying implementation note on the same day.

The statement said the decision was taken in support of the Federal Reserve’s dual mandate and that the Committee is continuing its policy of maintaining ample reserves in the banking system.

The Committee characterized economic activity as expanding at a strong pace. While uncertainty remains elevated owing, in part, to geopolitical developments, domestic spending has been resilient, according to the statement. It described productivity growth as strong and capital investment as robust, and said job gains have kept pace with the workforce while the unemployment rate has changed little.

On prices, the Committee said inflation remains elevated. “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,” the statement read. “The Committee will deliver price stability.”

Voting against the monetary policy action were Lisa D. Cook and Beth M. Hammack, who preferred to raise the target range for the federal funds rate by 1/4 percentage point at this meeting, the statement said. The remaining ten voting members approved the action.

Implementation Note

The Federal Reserve’s implementation note, also issued October 28, 2026, sets out the decisions made to implement the policy stance announced in the statement. The Board of Governors voted unanimously to maintain the interest rate paid on reserve balances at 3.90 percent, effective October 29, 2026.

As part of its policy decision, the FOMC voted to direct the Open Market Desk at the Federal Reserve Bank of New York, until instructed otherwise, to execute transactions in the System Open Market Account in accordance with a domestic policy directive effective October 29, 2026.

Under the directive, the Desk will undertake open market operations as necessary to maintain the federal funds rate in a target range of 3-3/4 to 4 percent. It will conduct standing overnight repurchase agreement operations at a rate of 4.0 percent, and standing overnight reverse repurchase agreement operations at an offering rate of 3.75 percent with a per-counterparty limit of $160 billion per day.

When appropriate, the Desk will increase System Open Market Account holdings of securities through purchases of Treasury bills and, if needed, other Treasury securities with remaining maturities of 3 years or less, to maintain an ample level of reserves. It will roll over at auction all principal payments from the Federal Reserve’s holdings of Treasury securities, and it will reinvest all principal payments from the Federal Reserve’s holdings of agency securities into Treasury bills.

In a related action, the Board of Governors voted unanimously to approve the establishment of the primary credit rate at the existing level of 4.0 percent.

The note states that the implementation information will be updated as appropriate to reflect decisions of the FOMC or the Board of Governors regarding the details of the Federal Reserve’s operational tools and approach used to implement monetary policy, and it points readers to the Federal Reserve Bank of New York’s website for more information regarding open market operations and reinvestments.

September Meeting

The October hold follows the Committee’s September 16, 2026 meeting, at which the FOMC voted 12 to 0 to raise the target range for the federal funds rate by 1/4 percentage point to 3-3/4 to 4 percent, likewise in support of the dual mandate, according to the September statement.

The September statement described economic activity as expanding at a solid pace; the October statement describes the pace as strong. Beyond that change, the two statements used identical language on elevated uncertainty, resilient domestic spending, strong productivity growth, robust capital investment, job gains keeping pace with the workforce, and an unemployment rate that has changed little.

The inflation paragraph also changed between meetings. In September, the Committee said the day’s policy action would support a timelier return to the 2 percent goal. In October, it said instead that accumulating more information will help determine the policy stance appropriate for a timely return of inflation to that goal.