The decision
The Federal Open Market Committee maintained the target range for the federal funds rate at 3.75% to 4% at its October 2026 meeting. The Federal Reserve released the decision on October 28, saying inflation remained elevated and that additional information would help determine the policy stance appropriate to support a timely return to its 2% inflation goal.
The committee approved the statement by a 10–2 vote. Lisa D. Cook and Beth M. Hammack preferred raising the target range by a quarter percentage point. Their dissent is part of the published decision and shows that committee members did not all favor the same action at that meeting.
The policy setting in context
In September the committee had raised the target range by a quarter percentage point to 3.75% to 4%. The October decision therefore held that range steady after the September increase. A steady target at one meeting does not promise a steady rate at the next meeting.
The federal funds target concerns the rate at which banks lend reserve balances to one another overnight. It is not the interest rate that every household or business pays. Banks, markets and lenders set other rates using their own conditions, and changes can pass through at different speeds and in different amounts.
The committee’s assessment
The October statement described economic activity as expanding at a strong pace, with resilient domestic spending, strong productivity growth and robust capital investment. It also said job gains had kept pace with the workforce and the unemployment rate had changed little. These are the committee’s assessments at the meeting, not separate guarantees about future data.
The statement noted elevated uncertainty, partly associated with geopolitical developments. Monetary policy involves judgments about activity, employment and inflation that may evolve as new evidence arrives. The decision and dissent provide a record of that meeting rather than a complete account of every participant’s economic forecast.
What a target range means
The target range is a policy instrument, while the committee’s 2% goal concerns inflation. They are different quantities: comparing them as if they were the same measure would be misleading. The Fed also said it was continuing its policy of maintaining ample reserves in the banking system.
Households considering borrowing or saving can check the actual terms offered to them, including rates, fees and conditions, rather than assuming a one-for-one change following a central-bank decision. This dated report explains the policy announcement; it does not predict individual lending rates or recommend a financial action.
How the decision reaches the economy
The committee’s target influences conditions in short-term funding markets through the Federal Reserve’s operating framework. Other borrowing costs reflect more than that target: lenders consider their funding costs, competition, credit risk, loan terms and market expectations. A fixed-rate loan already in place may respond differently from a newly offered variable-rate product. Deposit rates also depend on an institution’s decisions and the terms of the account. For businesses, financing conditions are only one influence on investment and hiring alongside demand, costs and access to credit. The timing of policy effects is uncertain, which is one reason a meeting statement must be read as a decision based on information available at that time. The statement itself does not set a schedule of future rate changes or guarantee a particular inflation outcome.
Key points in the report
- The committee maintained a 3.75% to 4% target range.
- The vote was 10–2, with two members preferring a quarter-point increase.
- The September meeting raised the range by a quarter point.
Sources and scope
Read the October FOMC statement and the September FOMC statement for the underlying figures and definitions. This article describes the specified reporting period; subsequent releases may change the picture.