Fed Holds Interest Rates Steady Ahead of US Congressional Elections
The United States Federal Reserve held its benchmark interest rate steady between 3.75 percent and 4 percent on October 28, 2026, opting for a pause despite persistent inflation. Boursorama reported that the decision arrived just six weeks after a quarter-point rate increase and less than a week before the November 3 midterm congressional elections.
Two Policymakers Favor Rate Increase to Fight Prices
The central bank’s decision was not unanimous. Two of the twelve monetary policymakers voted against the hold, favoring a quarter-point increase. Governor Cook and Cleveland Fed Beth Hammack both supported a tighter monetary stance to address high consumer prices.
Cook’s dissenting vote marked her first since joining the Board of Governors in 2022.
KPMG economist Diane Swonk stated in a note that Cook’s vote demonstrated independence from political pressure and reinforced the credibility of the Fed.
Dollar Stabilizes While Energy Shocks Drive Inflation
Following the Fed’s announcement, the U.S. dollar stabilized after moving near two-week highs ahead of the decision, according to Zonebourse. The euro shifted to 1.1134 dollars in early Asian trading, while the dollar gained slightly against the Japanese yen to reach 158.045 yens. Bond yields also reacted, as the yield on the 2-year Treasury note fell to 4.712 percent during Asian exchanges.
Inflation figures accelerated largely due to an energy price shock stemming from a conflict involving Iran initiated by Donald Trump. European gas prices also touched 100 euros per megawatt-hour on the same day, marking a level not seen since December 2022.
Analysts Project December Rate Hike as Calendar Changes
Oxford Economics analyst Michael Pearce projected that the central bank would likely raise rates in December, pointing to the two dissenting votes and the wording of the official statement. Heather Long, an economist for Navy Federal Credit Union, noted that the institution used the need for additional data to justify its pause rather than pointing directly to the political calendar.