In brief
In a June‑2023‑style vote, the U.S. Fed kept the federal funds rate unchanged at 3.75‑4.00% just days before the 2026 midterm elections. Ten of 12 members voted to hold, two favored a hike, while Fed Chair Kevin Warsh warned that inflation remains too high. Markets rose modestly on the decision, and South Korea’s KOSPI edged higher after the U.S. announcement.
On Wednesday, October 28, the U.S. Federal Reserve left the federal funds target range unchanged at 3.75 percent to 4 percent, a decision that comes just days before the 2026 midterm elections, Xinhua reported. The vote was 10 to 2, with ten staffers supporting the hold and two, including Cleveland Fed President Beth Hammack and Fed Governor Lisa Cook, pushing for a 25‑basis‑point increase.
The pause followed a recent 0.25‑percentage‑point hike in September and reflected the Fed’s view that economic activity is expanding strongly while inflation remains elevated, the committee said in its statement. It warned that further data would guide future policy moves and reaffirmed its policy of “maintaining ample reserves in the banking system.”
Fed Chair Kevin Warsh cautioned that inflation is “too high,” noting that energy and related prices had risen again in recent weeks and that the Fed’s responsibility is to prevent price widening across the economy. He said the committee will “ensure inflation returns to its 2 percent goal in a timely manner.”
“It’s our responsibility to get inflation down,” Warsh said, explaining that the FOMC discussions over the past few days focused on price stability.
“Our job is to ensure that relative price changes in some sectors do not broaden out across the economy,” Warsh added, emphasizing the evidence that energy‑related costs are a key driver.
U.S. markets responded to the decision with modest gains: the Dow Jones Industrial Average rose 0.19 percent, the S&P 500 increased 0.28 percent, and the Nasdaq added 0.27 percent, Xinhua reported. Most S&P 500 sectors closed positively, led by technology and energy, while utilities and real estate fell.
South Korean stocks also edged higher after the Fed’s pause, with the Korea Composite Stock Price Index gaining 0.17 percent at 9:15 a.m. according to Yonhap, as investors awaited strong Samsung earnings in an environment of robust memory‑chip demand.
Analysts, including PIMCO, caution that the Fed’s cautious stance signals potential further rate increases later this year; PIMCO had earlier projected a second 0.25‑point rise in December.
The Fed also announced a change to next year’s FOMC meeting schedule, reducing the number of scheduled rate‑setting votes to seven of eight in 2027, a move that signals a shift in its focus on broad monetary policy strategy, the agency said. Federal Reserve Chairman Kevin Warsh emphasized the importance of clear objectives and monetary policy strategy in balancing price stability with economic growth.
Overall, the decision underscores the delicate balance the Fed seeks between supporting economic activity and controlling inflation on the eve of the 2026 midterm elections.
