Fed Interest Rate Decision: Fed Holds at 3.75–4% as Hike Bets Grow

The latest Fed interest rate decision did not change rates, but it did not calm the hike talk either. On October 28, 2026, the US Federal Reserve kept its key rate in a range of 3.75% to 4%. Two officials wanted a hike right away. Traders now see a strong chance of a rise in December. So what does this pause mean for the dollar, the Swiss franc, and stocks? Let’s walk through it step by step.

Fed Interest Rate Decision: What the Fed Announced

The Federal Open Market Committee (FOMC) is the group inside the Fed that sets interest rates. It voted 10 to 2 to hold the federal funds rate steady. That rate is what banks charge each other for overnight loans. It shapes the cost of mortgages, car loans, and business credit.

The official Fed statement made three main points:

• Growth: “Economic activity is expanding at a strong pace.” In September, the Fed had called it “solid,” as CNN reported.
• Inflation: “Inflation remains elevated.” More data will help the Fed choose its next step.
• Promise: “The Committee will deliver price stability.”

Governor Lisa D. Cook and Cleveland Fed President Beth M. Hammack voted against the hold. Both preferred a quarter-point hike at this meeting.

Why the Fed Paused After September’s Hike

This pause follows a rare move. In mid-September, the Fed raised rates by 0.25 percentage points. According to SRF, it was the first hike since July 2023.

Since then, prices have kept climbing. US consumer prices rose 3.7% in September from a year earlier. SRF notes that this is close to the highest level in over three years. The Fed’s goal is 2%. Energy is the main driver, as oil prices jumped during the Iran war. The boom in artificial intelligence and solid consumer spending also add pressure.

So why wait? Fed Chair Kevin Warsh said the Fed wants to gather more data first. He also pointed to energy prices and an uncertain global picture.

What Kevin Warsh Said at the Press Conference

Warsh took over as Fed chair in May. In his opening statement, he painted a picture of a strong economy. Growth in the first half of 2026 was revised up from 1.8% to 2.4%. He said the third quarter looked even faster, led by healthy consumer spending.

Jobs look good too. Warsh said the jobless rate is lower than a year ago. Weekly jobless claims are running near their lowest level in generations.

But inflation is the problem. Warsh said inflation has been above target for close to six years. “It’s our responsibility to get inflation down,” he said. He added that energy prices “have moved higher again in recent weeks.”

Later, he was even firmer. “We will deliver price stability, no ifs, ands or buts,” Warsh said, as quoted by CNN.

Still, he refused to promise a December move. MarketWatch reported that he would not prejudge the next decision. He called the debate inside the Fed a “family fight.”

A New Meeting Schedule From 2027

Warsh also announced a process change. The Fed will keep eight meetings a year. But in 2027, one meeting will focus only on long-term strategy. It will have no rate vote and no statement. In 2028, he expects two strategy meetings and six policy meetings. CNBC also covered this shift.

Politics and the Midterm Timing

The timing of this rate decision drew a lot of attention. It came just six days before the US midterm elections. SRF reports that President Donald Trump has spoken out against rate hikes several times. He has even called for a cut.

Warsh insisted the Fed acts on data, not politics. Der Spiegel quoted him as saying he heard “not a single word about politics” in the meeting.

History shows an election is no barrier to action. SRF notes that four years ago, the Fed raised rates by 0.75 points right before the 2022 midterms.

Are Markets Betting on a Fed Rate Hike in December?

Yes, and quite strongly. After this Fed interest rate decision, the bets grew. Traders use futures contracts to bet on the Fed’s next move. The CME FedWatch tool turns those prices into odds.

Brazil’s InfoMoney reported FedWatch odds of 87.5% for a December quarter-point hike, up from 81.4% before the decision. Swiss outlet The Market put the odds at almost 80%. Either way, most traders expect a hike. That would lift the range to 4% to 4.25%.

The Market also notes that traders see a slow pace. They price two more hikes in March and June 2027, then a stop. These are bets, not certainties. Fresh data can change them quickly.

We covered the build-up in our piece on markets pricing higher odds of a 2026 rate hike.

What Economists Are Saying

Economists are split on the pause, as Cash.ch reported from Reuters reactions.

• Elmar Völker, LBBW Research: He said the Fed had good reasons to hike now. His view: “postponed is not cancelled.” He expects the case for a December hike to grow stronger.
• Lena Dräger, Kiel Institute for the World Economy: She called the pause the right call. Another step now “would be premature,” she said. She noted that gasoline costs 34% more than a year ago. Higher rates do little against that. Wages are rising about 3%, slower than prices.

Völker’s team at LBBW also points to September’s “dot plot.” That chart shows each official’s rate forecast. Most officials saw one more hike by the end of 2026.

How Wall Street Reacted to the Rate Hold

US stocks rose modestly. Here is how the main indexes closed on October 28, per MarketWatch:

Market	Close	Change
Dow Jones Industrial Average	52,475.10	+0.19%
S&P 500	7,743.98	+0.28%
Nasdaq Composite	26,549.85	+0.27%

Bond markets told a more mixed story. The two-year Treasury yield, which tracks Fed policy closely, slipped to about 4.73%. The 10-year yield rose to about 5.04%. That was its biggest one-day gain since September 28. The 30-year yield climbed to about 5.36%.

The dollar index fell about 0.2%, Reuters reported. Gold futures lost 0.6% to $4,036 an ounce. Higher long-term yields matter for borrowers too. For a look at home loans, see our update on mortgage interest rates today.

What It Means for the SNB and the Swiss Franc

Swiss investors watch every Fed move. US rates shape the gap between dollar and franc returns. That gap moves the Swiss franc.

The Swiss National Bank (SNB) held its own policy rate at 0% on September 24, 2026. Its meeting summary gives useful context:

• The franc lost about 3% on a trade-weighted basis since June.
• The SNB linked this to the wider rate gap with other countries.
• That gap made the franc more popular as a cheap funding currency for “carry trades.” In these trades, investors borrow in a low-rate currency to invest in a higher-rate one.
• Safe-haven demand for the franc was weak over the period.
• The SNB said a higher readiness to intervene in currency markets is no longer needed.

So the gap between a 0% SNB rate and a 3.75% to 4% Fed range is wide. A December Fed hike would widen it further. That could keep some pressure on the franc, though currencies rarely move in straight lines.

Right after the Fed news, the moves were small. According to finanzen.ch, the dollar slipped to 0.8291 francs from 0.8302. The euro held near 0.9244 francs.

For background, see our reports on the SNB zero-rate hold and the franc’s 12-month low.

Swiss Stocks Hit a Record High

Zurich took the news calmly. On October 29, the Swiss Market Index (SMI) opened higher and hit a new all-time high. MarketScreener reported the SMI up 0.8% at 14,696.15 points around 09:15 local time. The old record of about 14,670 dated from mid-August.

The heavyweights helped. In early trade, Novartis (NOVN.SW) rose 1.6%. Nestlé (NESN.SW) gained 1.2%. Roche (ROG.SW) added 0.6%.

Analysts at Swissquote summed up the mood. The Fed gave markets “some breathing room,” they said, without signaling that financing costs have peaked.

What We Are Watching Next After This Rate Pause

The next few weeks are packed with data. Each release could shift the odds for December. Here is what matters most:

• Inflation data: The Fed’s favorite inflation gauge is the personal consumption expenditures (PCE) price index. The Market says economists expected September PCE inflation to rise to 3.6% from 3.4%. Our earlier report on US core PCE explains this measure.
• Growth data: The first estimate of third-quarter growth was also due. Economists expected an annual pace of about 3.2%.
• Oil prices: Brent crude traded near $115 a barrel on October 29, per MarketScreener. Energy is the main inflation driver right now.
• The midterms: The vote is on November 3. Results may shape the political noise around the Fed.
• December meetings: The Fed decides on December 9. The SNB also meets in December.

Conclusion: What This Fed Interest Rate Decision Means for You

This Fed interest rate decision was a pause, not a turn. The Fed held at 3.75% to 4%, but two officials wanted a hike. Its statement called growth strong and inflation elevated. Traders see a December hike as the most likely next step, though nothing is certain.

For Swiss and global investors, the rate gap matters most. A wider gap between US and Swiss rates can weigh on the Swiss franc. Higher US yields can also pressure stock valuations over time. For now, though, both Wall Street and Zurich stayed calm. We will keep watching inflation, oil, and the December meetings closely.

FAQs

What was the Fed interest rate decision in October 2026?

On October 28, 2026, the Fed held its key rate in a range of 3.75% to 4%. The vote was 10 to 2. Lisa Cook and Beth Hammack wanted a quarter-point hike.

Will the Fed raise rates in December 2026?

Nobody knows for sure. Futures markets priced roughly 80% to 88% odds of a quarter-point hike after the meeting. Fed Chair Kevin Warsh said he would not prejudge the December 9 decision.

Why did the Fed not hike rates in October?

The Fed said more information will help it pick the right policy. Warsh pointed to energy prices and global uncertainty. Some economists also linked the pause to the US midterm elections, which Warsh rejected.

How does the Fed interest rate decision affect the Swiss franc?

The SNB rate is 0%, far below the Fed’s range. The SNB says this wider rate gap helped weaken the franc by about 3% since June. Another Fed hike could widen that gap further.

How did stocks react to the Fed’s rate hold?

The S&P 500 rose 0.28% and the Nasdaq gained 0.27% on October 28. The next morning, Switzerland’s SMI hit a record high, helped by Novartis, Nestlé, and Roche.

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Disclaimer: This article is for informational purposes only and is not financial advice. Always do your own research or consult a licensed financial advisor before making investment decisions.