In brief
The Fed kept the benchmark rate unchanged, with 10 of 12 members voting to hold and 2 favoring a hike. Chair Kevin Warsh warned that inflation remains too high and that additional increases could come later in the year. The decision sent U.S. stocks higher and narrowed the gap with South Korea’s rate. Investors remain focused on forthcoming economic data before any further moves.
On Oct. 28, the Federal Open Market Committee (FOMC) voted 10‑2 to keep the federal funds rate in the 3.75‑4.00 percent range, less than a week before the 2026 midterm elections. The move follows a recent 0.25‑percentage‑point hike in September and reflects the committee’s assessment that economic activity is expanding strongly while inflation remains elevated.
In its statement, the FOMC highlighted that productivity growth is strong, capital investment robust, and job gains have kept pace with the workforce. Nonetheless it reaffirmed its commitment to price stability and to maintaining ample reserves in the banking system, noting that further data will guide future policy decisions.
Fed Chair Kevin Warsh said:
"Energy and related prices have moved higher again in recent weeks, and our job is to ensure that relative price changes in some sectors do not broaden out across the economy."
Warsh added that inflation is still "too high" and that the committee may pursue additional rate increases later this year. He also announced a change to the FOMC meeting schedule for 2027, planning to hold rate‑setting votes at seven of eight meetings.
U.S. markets reacted positively to the pause. The Dow Jones Industrial Average rose 0.19 percent, the S&P 500 added 0.28 percent, and the Nasdaq gained 0.27 percent. The announcement narrowed the interest‑rate gap between the United States and South Korea to at most one percentage point, a development noted by Yonhap. Meanwhile, South Korean stocks opened slightly higher, buoyed by the Fed decision and expectations for strong Samsung Electronics earnings.
Kyodo News reported that the Fed’s decision signals a cautious approach to inflation, indicating that the bank will observe economic conditions before any further rate adjustments.
