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Colby Smith covers the Federal Reserve.
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The Federal Reserve held interest rates steady on Wednesday, despite no recent progress on getting inflation down to the central bank’s 2 percent target.
Officials voted 10-2 to keep rates at the range of 3.75 percent to 4 percent. That range was reached in September after policymakers decided unanimously to raise rates for the first time since 2023.
Lisa D. Cook, a Fed governor who President Trump has tried to fire, issued her first-ever dissent on the Fed’s monetary policy settings in favor of a quarter-point increase on Wednesday. She was joined by Beth M. Hammack, president of the Federal Reserve Bank of Cleveland, who has dissented repeatedly this year.
In a statement accompanying the rate decision, the Fed conveyed that it had more work to do to quell inflation, which it described as “elevated.”
At a news conference after the decision, Kevin M. Warsh, the Fed chairman, started with an upbeat assessment of the economy, but stressed that inflation was still too high.
He also said the central bank would cut the number of meetings at which it votes on interest rates. Mr. Warsh said the Fed would still meet eight times in 2027, but one of those meetings would focus “exclusively on broad monetary policy strategy” and would not include a vote on interest rates. Starting in 2028, the Fed plans to dedicate two meetings to such broader strategy.
The Fed gathered days before midterm elections that will decide whether Republicans retain control of Congress and how much scope President Trump will have to enact his agenda in the second half of his term. Affordability issues are central for voters after nearly six years in which inflation has overshot the Fed’s target.
“Politics played no role in the decision,” Mr. Warsh said when asked about the midterms.
Mr. Warsh, who took over as chairman of the Fed in May, has made taming inflation the top priority of his four-year term.
Since officials at the Fed met in September, inflation data has been far from reassuring. Price pressures appear to be broadening out after shocks caused by Mr. Trump’s tariffs and the U.S.-Israel war with Iran. Energy prices have shot higher, threatening to spill over into other goods and services.
The economy has continued to grow at a solid pace despite these headwinds, fueled by an investment boom stemming from companies scrambling to expand their artificial intelligence capabilities. Wage gains have failed to keep up with rising prices, however, meaning Americans are earning less for an hour of work.
U.S. government borrowing costs have risen sharply, making not only mortgages and other consumer loans more expensive, but also financing for companies. Certain A.I. companies, which have issued a significant amount of debt to fund their expansion plans, appear particularly exposed.
As a result, financial conditions, which track the availability of credit across the economy, appear slightly less accommodative. To what extent this will help the Fed tame inflation depends in large part on whether these conditions tighten further.
Ms. Hammack’s dissent on Wednesday was widely expected given her views that the Fed’s policy settings are not restraining the economy. Ms. Cook’s dissent was notable in that she is locked in a legal battle with Mr. Trump, who has sought to pressure the Fed into lowering rates. Ms. Cook became a target in the summer of 2025 when the president seized on unproven allegations that she committed mortgage fraud before joining the central bank.
Mr. Trump renewed that effort after the Supreme Court ruled against him on the matter earlier this year. The White House started its own investigation into Ms. Cook and summoned her in for an in-person hearing.
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Oct. 28, 2026, 4:06 p.m. ETThe S&P 500 ended the day 0.3 percent higher, after a volatile period of trading while Warsh was speaking. Easier monetary policy, with rates expectations falling, is usually bullish for the stock market.
Oct. 28, 2026, 4:02 p.m. ETFed Will Hold Fewer Rate-Setting Meetings Starting Next Year
ImageKevin M. Warsh, the Fed chairman, said the central bank beginning next year will hold fewer meetings at which it votes on interest rates. Credit...Saul Loeb/Agence France-Presse — Getty ImagesStarting next year, the Federal Reserve will reduce the number of meetings at which it sets interest rates, Kevin M. Warsh, the central bank’s chairman, announced Wednesday.
The Fed’s 12-member policy committee currently holds eight regularly scheduled meetings a year, a cadence it has maintained since the 1980s. Mr. Warsh, who took over as the Fed’s leader in May, raised the idea of reducing the number of meetings at the committee’s closed-door session in July, a discussion first reported by The New York Times and later confirmed in the publicly released minutes of the meeting.
In a news conference on Wednesday, Mr. Warsh said the Fed would meet eight times next year as usual. But only seven of those meetings will include a vote on interest rates. The eighth “will focus exclusively on broad monetary policy strategy,” he said.
In 2028, the Fed expects to hold just six rate-setting meetings, with two meetings dedicated to discussions of longer-run strategy, Mr. Warsh said.
“Getting policy right involves assessing near-term developments at timely, regular and information rich intervals,” Mr. Warsh said, “but it’s equally important we reserve time and space as an intellectually diverse group for strategic deliberations, for thinking anew about big questions, looking out over longer time horizons.”
Some economists have criticized the idea of holding fewer meetings, arguing it could make it harder for the Fed to respond quickly to changes in inflation and the labor market. The move also fits a pattern during the early months of Mr. Warsh’s chairmanship toward providing less information to investors and the public, reversing a decades-long trend toward greater openness.
Other economists, however, have defended the idea. They argue that providing more time between meetings will make it easier for policymakers to identify meaningful shifts in economic conditions. And they note that the Fed can hold emergency meetings if necessary, as it has done numerous times in the past.
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SKIP ADVERTISEMENTOct. 28, 2026, 3:43 p.m. ETTakeaways from Warsh’s news conference.
The Federal Reserve held rates steady on Wednesday as expected. The two dissenting officials in favor of a quarter-point increase included Lisa D. Cook, a governor who is fighting to keep her job amid President Trump’s campaign to fire her. Kevin M. Warsh, the Fed’s chairman, leaned into the idea that the central bank had the flexibility to accumulate more information to make the right determination about rates because expectations about future inflation do not point to a lack of confidence in the Fed’s ability to eventually achieve the 2 percent target and because there are no signs the economy is overheating.
Mr. Warsh’s biggest announcement of the day pertained to how often the Fed will vote on interest rates in the coming years, an idea that The New York Times first reported the chairman raised in July. In 2027, the Fed plans to hold seven policy meetings, with one dedicated to discussing “broad monetary policy strategy.” In 2028, there will be six policy meetings and two on strategy.
Mr. Warsh repeatedly mentioned a shift in financial conditions since September, which he suggested helped the Fed in the pursuit of its inflation goal on the margins. Credit conditions have “tightened for some businesses and households, much as we would expect,” he said. “Market participants are becoming somewhat more discerning in their capital allocations, and while overall financial conditions are tighter, I’m unwilling and unable to call them tight. But broadly, these developments go in the direction of achieving a longer, more durable period of economic growth and price stability.”
The Fed’s meeting is days before the midterm elections, but Mr. Warsh emphasized that politics played no role in Wednesday’s decision to hold rates steady. But the political backdrop has been hard to ignore, especially because of Mr. Trump’s repeated attacks on the Fed for not complying with his demands for lower rates. The White House has demanded that Ms. Cook attend an in-person hearing to defend herself against allegations that she committed mortgage fraud, something Mr. Trump has cited as a reason to fire her.
Oct. 28, 2026, 3:35 p.m. ETInvestor expectations for interest rate increases have also fallen, further pointing to doubt about the Fed’s resolve to keep raising rates. Robert Dishner, a senior portfolio manager at Neuberger, said that while a December rate increase remains on the table, “the 2027 hikes that the market has priced in may require further consideration.”
Oct. 28, 2026, 3:34 p.m. ETThere is an interesting dynamic in the market as investors digest Warsh’s comments. The short-dated, two-year Treasury yield has fallen to 4.71 percent, while the 10-year Treasury yield has risen to 5.04 percent. The move in the 10-year was driven by a rise in the breakeven inflation rate, which is a market measure of investors’ inflation expectations. “That to me is literally the market saying that you talk tough on inflation but you are not delivering on it,” said George Goncalves, head of U.S. macro strategy at MUFG Securities.
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SKIP ADVERTISEMENTOct. 28, 2026, 3:11 p.m. ETThe biggest question coming into the news conference was why the Fed didn’t raise rates given the persistence of inflation. I’m not sure we ever got an answer, despite the best efforts of reporters to pin Warsh down.
Oct. 28, 2026, 3:09 p.m. ETThat’s a wrap. Takeaways are coming soon.
Oct. 28, 2026, 3:07 p.m. ETAsked if the Fed would participate in a White House hearing on Lisa Cook, which could result in her firing, Warsh simply replied: “Not to my knowledge.”
Oct. 28, 2026, 3:05 p.m. ETWarsh says the economy is strong, but not necessarily too hot in a way that is leading to inflation. “Is the economy running too hot? Is the economy too strong? That isn’t the judgment of most of my colleagues,” he says. He argues that productivity growth is picking up, which allows the economy to grow faster without causing inflation.
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SKIP ADVERTISEMENTOct. 28, 2026, 3:03 p.m. ETWarsh reiterated his comments that he “does not believe” in forward guidance. However, he was careful to include a caveat for when the economy is in crisis. Recalling his experience during the 2008 financial crisis, he said that in those moments, guidance is needed.
Oct. 28, 2026, 2:59 p.m. ETWarsh is asked about the role that the A.I. investment boom is playing in driving both inflation and economic growth. He says that A.I. is an important factor in the strong economy, but not the only one. And he pushes back against the idea that A.I. investments are insensitive to interest rates, noting that corporate bond investors appear to be distinguishing between A.I. companies that they view as safe and those that could be riskier. In other words, he still believes interest rates will do the job of bringing inflation under control.
Oct. 28, 2026, 2:57 p.m. ET“Politics played no role in the decision,” Warsh said when asked about the midterms, which are just days away.
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CreditCredit...Pool, via ReutersOct. 28, 2026, 2:54 p.m. ETWarsh says that while surveys show that consumers are expecting faster inflation in the near-term, there is relatively little evidence that they are expecting faster inflation over the longer run. That’s generally true, but there have been some hints that consumers are expecting inflation to be higher in the future as well. Economists and policymakers pay close attention to such measures of expectations because if consumers and businesses start to expect inflation to endure, it can make it harder for the Fed to bring it under control.
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SKIP ADVERTISEMENTOct. 28, 2026, 2:53 p.m. ETWarsh is asked about the task forces that he convened to look at a wide range of issues that he believes are central to how the Fed conducts policy. They include groups looking at how the Fed communicates as well as how it models inflation. He said “some, but not all” groups will have recommendations by year-end, the deadline that Warsh initially set.
Oct. 28, 2026, 2:48 p.m. ETReducing the number of meetings is the most major change that Warsh so far has announced at the central bank. The reason that Warsh most often cites is that it will allow for more data to accumulate between votes on interest rates. One potential risk is that it might leave the Fed less nimble to act if the economic backdrop rapidly changes. The Fed can hold emergency meetings, but they only tend to do that during periods of crisis.
Oct. 28, 2026, 2:46 p.m. ETYields have come back down to 5 percent where they started the day. It appeared investors were responding to Warsh’s comments on inflation expectations remaining anchored, despite hotter inflation data in recent weeks. It’s obviously hard to know the precise driver but what is clear is that markets are twitchy, moving quickly higher and lower since Warsh started speaking.
Oct. 28, 2026, 2:46 p.m. ETWarsh says the committee is “going to be able to figure out what’s the appropriate protocol” and that he is “encouraged by the progress we’ve made in a short period of time.”
Oct. 28, 2026, 2:47 p.m. ETIt isn’t clear what progress the Fed has made, given the hot September inflation readings. But he highlights the continued stability of inflation expectations, which he said indicates confidence that the Fed will do what is needed to bring inflation under control.
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SKIP ADVERTISEMENTOct. 28, 2026, 2:45 p.m. ETColby leads off with the central question of the day: If inflation is so high, why not raise rates today? Warsh stresses that the Fed is committed to bringing inflation down to its 2 percent target and is willing to act to get there. But he doesn’t directly address why policymakers didn’t act today. “If the crux of your question is you haven’t achieved price stability, you’re right,” he says. But he says they are committed to getting there.
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Oct. 28, 2026, 2:44 p.m. ETAs The New York Times first reported earlier this year, Mr. Warsh floated the idea of fewer rate setting meetings in July.
Oct. 28, 2026, 2:39 p.m. ETBottom line: The Fed plans to hold only seven votes on interest rates next year, and six in 2028, down from eight in recent years. Warsh first raised the possibility of reducing the number of policy meetings over the summer.
Oct. 28, 2026, 2:38 p.m. ETStocks are breaking out higher, up roughly 0.4 percent now.
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SKIP ADVERTISEMENTOct. 28, 2026, 2:38 p.m. ETWarsh announces that the Fed will meet eight times next year, as it has in recent years. But in a change, one of those meetings will focus “exclusively on broad monetary policy strategy” and will not include a vote on interest rates. Starting in 2028, the Fed plans to dedicate two meetings to such broader strategy.
Oct. 28, 2026, 2:37 p.m. ETAll of that strong growth rhetoric has helped push up equity prices again, with the S&P 500 rising 0.2 percent. Bond yields have also continued to push higher, with the 10-year Treasury yield rising to 5.04 percent.
Oct. 28, 2026, 2:37 p.m. ETWarsh says that given the strength of the labor market, and the continued elevated rate of inflation, the committee’s discussions focused mostly on the price stability side of the Fed’s dual mandate. That could be a hint that further rate increases remain likely, despite the committee’s decision not to raise rates today.
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SKIP ADVERTISEMENTLoad new postsOct. 28, 2026, 12:00 p.m. ETColby Smith covers the Federal Reserve.
Fed Holds Rates Steady Despite Lack of Progress on Inflation
ImageKevin M. Warsh, the Fed chairman, said during his news conference on Wednesday that policymakers had voted to keep interest rates steady.Credit...Julia Demaree Nikhinson/Associated PressThe Federal Reserve held interest rates steady on Wednesday, despite no recent progress on getting inflation back down to the central bank’s 2 percent target.
Officials voted 10-2 to keep rates at the previous range of 3.75 percent to 4 percent. That level was reached in September after policymakers decided unanimously to raise borrowing costs for the first time since 2023.
Lisa D. Cook, a Fed governor whom President Trump has tried to fire, issued her first-ever dissent on the Fed’s monetary policy settings, voting in favor of a quarter-point increase. She was joined by Beth M. Hammack, president of the Federal Reserve Bank of Cleveland, who has dissented a number of times this year.
In a statement accompanying the rate decision, the Fed conveyed that it still had more work to do to quell inflation, which it described as “elevated.”
“The accumulation of more information will help the committee determine the policy stance appropriate to ensure a timely return of inflation to the committee’s 2 percent goal,” it said. That message aligned with comments from top policymakers in the lead-up to October’s meeting. Several officials signaled their support for another rate increase later this year, even as they argued that there was no urgency to deliver increases at back-to-back meetings.
The central bank gathered just days before midterm elections that will decide whether Republicans will retain control of Congress and in turn, how much scope President Trump will have to enact his agenda in the second half of his term. Affordability issues are front and center for voters after nearly six years in which inflation has overshot the Fed’s target.
Kevin M. Warsh, who took over as chairman of the central bank in May, told reporters that politics did not factor into the Fed’s decision on Wednesday. Instead, he suggested that the Fed had the flexibility to wait and accumulate more information before its next meeting in December. He pointed to the fact that the public does not appear to be losing confidence in the Fed’s ability to eventually achieve its 2 percent target and that there were not yet signs that the economy was overheating.
“Is the economy running too hot? Is the economy too strong? That isn’t the judgment of most of my colleagues,” said Mr. Warsh.
Mr. Warsh also leaned into the fact that financial conditions, which track the availability of credit across the economy, appear slightly less accommodative than they have in the past.
U.S. government borrowing costs have risen sharply in recent months, making not only mortgages and other consumer loans more expensive, but also financing for companies. Certain artificial intelligence companies, which have issued a significant amount of debt to fund expansion plans, appear particularly exposed, sparking a sell-off in technology stocks as recently as last week.
On Wednesday, the short-dated, two-year Treasury yield fell to 4.72 percent while the 10-year Treasury yield rose before settling around 5.02 percent. The move in the 10-year was driven by a rise in the break-even inflation rate, which is a market measure of investors’ inflation expectations.
Mr. Warsh stopped short of describing financial conditions as “tight,” but he noted that “market participants are becoming somewhat more discerning in their capital allocations.”
Later in the news conference, he said this shift wasn’t something that the Fed was “uncomfortable with.”
“It tells me the policy is working, and I think we can do that and make the economy more durable, have it last longer, and still achieve stable prices,” he said.
The chairman was on the defensive on Wednesday because the incoming inflation data since the central bank’s last meeting has been far from reassuring. Price pressures appear to be broadening out after a series of recent shocks caused first by Mr. Trump’s tariffs and later by the U.S.-Israel war with Iran. Energy prices have shot higher across the board, threatening to spill over into other goods and services.
The economy has continued to grow at a solid pace despite these headwinds, fueled in large part by an investment boom stemming from companies scrambling to expand their A.I. capabilities. Prices for computer chips and other crucial components have risen sharply, contributing to higher inflation. Wage gains have failed to keep up with rising prices, however, meaning Americans are earning less for an hour of work.
Asked specifically about A.I., Mr. Warsh pushed back on the idea that the sector is insensitive to higher rates, citing recent market ructions in that space. Investors were “discriminating between the kinds of investments they want to make,” he noted.
Mr. Warsh also stressed the productivity gains that he expects the proliferation of this technology to continue to fuel. “Economic growth is higher, but that doesn’t tell me that economic growth is somehow causing inflation and making our job harder.” he said.
Ms. Cook’s dissent was notable for two reasons. She is the first governor on the Fed’s board to vote against a policy decision since Mr. Warsh took over as chairman. She is also locked in a legal battle with Mr. Trump, who has long sought to pressure the Fed into lowering rates. Ms. Cook became a target in the summer of 2025 when the president seized on unproven allegations that she committed mortgage fraud before joining the central bank.
Mr. Trump has renewed that effort after the Supreme Court ruled against him on the matter earlier this year. The White House has launched its own investigation into Ms. Cook and summoned her in for an in-person hearing. Mr. Warsh on Wednesday said the Fed would not be involved in those proceedings.
The chairman on Wednesday also announced a major change to how often the Fed will vote on interest rates going forward, an idea that The New York Times first reported the chairman raised with colleagues in July. In 2027, the Fed will hold seven policy meetings where rates will be set, and one dedicated to discussing “broad monetary policy strategy.” In 2028, there will be six policy meetings, and two focused on strategy. For decades, the Fed has met eight times a year to set interest rates.
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