Two Fed officials voted to raise rates today, and stocks finished only modestly higher.

Two Fed officials voted to raise rates today, and stocks finished only modestly higher. The Fed held the federal funds range at 3.75%-4.00% on a 10-2 vote, with Governor Lisa Cook and Cleveland Fed President Beth Hammack both dissenting in favor of a 25 basis point hike.

The statement upgraded the Fed's description of economic activity to "strong" from "solid" in September, while still stressing elevated inflation and saying more information would guide policy. AP framed the hold as coming despite stubbornly high inflation, with little hint about the next move. CME FedWatch pricing put the odds of a December hike at about 85% after the decision, up from 78% the day before. The next decision is due December 9.

The rates market is where the reaction showed. The 10-year Treasury yield ended at 5.05%, up 6bp from 4.99%. The 2-year slipped to 4.67% from 4.70%. The S&P 500 rose as much as 0.46%, gave most of that back, and still closed higher.

My read: the timing is doing a lot of work here. This decision lands less than a week before the November 3 midterms, in a campaign dominated by cost-of-living concerns. Warsh said politics did not influence the decision and that the Fed needs more data. But with hawkish dissents on the record, a stronger read on the economy, and futures leaning hard toward a hike, I have a hard time seeing how Chair Warsh avoids one in December.

Sources:
AdmiralMarkets: https://admiralmarkets.com/analytics/traders-blog/fomc-october-2026-fed-holds-rates
CNN Business: https://edition.cnn.com/2026/10/28/business/live-news/federal-reserve-interest-rate-october

Not financial advice. For informational and educational purposes only.