Key points for fed rate decision october 2026
- The Fed held rates at 3.75–4.00% on 28 October in a 10–2 vote. Lisa Cook and Beth Hammack both wanted an immediate hike.
- The dollar slipped about 0.2% after Chair Warsh’s press conference, which markets read as slightly less hawkish than expected.
- Thursday’s data was strong: Q3 GDP grew 3.4% and September core PCE rose to 3.1%, keeping a December hike in play.
- The rupee touched a two-week low of 95.38 on Thursday before closing near 95.25.
What happened
| Item | Detail |
|---|---|
| Decision | Hold at 3.75–4.00% |
| Vote | 10–2 (Cook and Hammack voted for a 25 bp hike) |
| Previous move | +25 bp on 16 September |
| Statement change | Growth described as “strong”, up from “solid” |
| New projections? | No; next in December |
| Next decision | 9 December 2026 |
What Warsh said: Warsh said the September hike’s “monetary medicine” is starting to work and that 2% remains the target. He said the Fed’s discussion focused mainly on price stability, and that politics played no role in the decision, six days before the midterm elections. He repeated that he doesn’t believe in forward guidance outside a crisis.
A change to the Fed’s calendar: Warsh also announced the Fed will cut the number of rate-setting meetings, to seven in 2027 and six in 2028. Wells Fargo Investment Institute noted that less Fed communication could mean more market volatility.
Why it matters
A “hawkish hold” that markets read as softer. The two dissents showed real pressure for another hike. But Warsh’s comments were read as slightly less hawkish than markets had priced. Bloomberg Intelligence noted that traders hoping for a clear December signal may have been disappointed and will now have to watch the data.
The data the next day pushed back. Q3 GDP grew at a 3.4% annualised rate, above the roughly 3.2% expected. Consumer spending rose at a 3.8% pace. In September, headline PCE inflation rose 0.5% on the month and accelerated to 3.6% year on year, while core PCE ticked up to 3.1%. Strong growth and rising inflation support the case for a December hike.
December remains the key date. FedWatch showed about a 78% chance of a December hike on Thursday. Other estimates put it at up to 85%.
Market reaction
| Market | Reaction |
|---|---|
| US dollar index | Down about 0.2% after the press conference; steady near 102.26 on Thursday |
| EUR/USD | Up about 0.3%, to around 1.1160 |
| USD/JPY | About 158.28 after the decision, ahead of the BoJ |
| 2-year Treasury yield | Fell after the meeting (estimates range from about 1.5 bp to 8 bp) |
| Gold | Fell about 0.7%, to near $4,038, on Thursday |
| US stocks | Closed higher on the day |
Impact on Indian traders
USD/INR: The rupee had weakened 21 paise to 95.28 on Wednesday, before the Fed, on a strong dollar and high crude prices. On Thursday it fell to a two-week low of 95.38 intraday on the firm dollar and the slightly hawkish Fed. It then recovered to close at 95.25 (provisional), helped by firmer domestic stocks and softer crude. Analysts expect USD/INR to trade between 94.50 and 95.50 in the near term.
Why the rupee didn’t gain more: Persistent domestic dollar demand limited the relief from a weaker dollar. Kotak’s Anindya Banerjee had warned before the decision that a firm message on December could support
|the dollar and yields and pressure emerging-market currencies. Oil, FPI flows and RBI operations remain the main drivers.
INR crosses (29 October):
| Pair | Level | Change |
|---|---|---|
| USD/INR | 95.253 | +0.05% |
| EUR/INR | 106.387 | +0.18% |
| GBP/INR | 127.337 | +0.36% |
| JPY/INR (per 100 yen) | – | – |
Currency pairs on NSE: NSE lists USD/INR, EUR/INR, GBP/INR and JPY/INR, plus EUR/USD, GBP/USD and USD/JPY. Trading forex with unauthorised offshore platforms is not permitted under FEMA.
The Fed’s move to fewer meetings and less guidance could make markets jumpier around each data release. Our Risk-On / Risk-Off Meter can help you track shifts in risk appetite before you trade.
What to watch next
| Date (IST) | Event | Why it matters |
|---|---|---|
| Fri, 30 Oct | BoJ decision ; RBI forex reserves (evening) | USD/JPY, JPY/INR; RBI intervention signal |
| Sun, 1 Nov | US clocks change | US data moves one hour later in IST |
| Tue–Wed, 3–4 Nov | US midterm elections | Results during Indian trading on 4 November |
| Thu, 5 Nov | Bank of England decision | GBP/USD and GBP/INR |
| Fri, 6 Nov | US October jobs report | Key input for December |
| Mid-Nov | US October CPI | Inflation check before the Fed |
| Tue–Wed, 8–9 Dec | FOMC, with new projections | A hike is about 78–85% priced |
Possible scenarios:
- If US jobs and CPI data stay strong, a December hike is likely to become close to certain, which could support the dollar and weigh on the rupee.
- If data softens, December odds may fall and the dollar could extend its post-Fed dip, giving the rupee some relief.
- Either way, crude oil and the 4 November midterm results could cause sharp swings in USD/INR during Indian hours.
Track all release times on our Economic Calendar, and find more coverage in Market Analysis & News. Related: FOMC October 2026 preview, Gold after the Fed decision
FAQs
What did the Fed decide in October 2026?
The Fed held its benchmark rate at 3.75–4.00% on 28 October in a 10–2 vote. Two officials, Lisa Cook and Beth Hammack, wanted an immediate hike.
How did the Fed decision affect the rupee?
The rupee touched a two-week low of 95.38 on 29 October on a firm dollar and the slightly hawkish Fed, then closed near 95.25 as crude softened and domestic stocks rose.
Will the Fed raise rates in December 2026?
Markets price roughly a 78–85% chance of a hike at the 8–9 December meeting. Strong Q3 GDP and rising core PCE inflation support that view.