US Federal Reserve keeps rates steady at 3.75-4%, cites strong economic activity and resilient spending

Why did the Fed pause after its first hike since 2023? A look at the October FOMC statement, the vote and the inflation outlook

PGurus Newsdesk

October 29, 2026

Fed keeps rates steady at 3.75-4% as inflation stays elevated and spending stays resilient

The Fed says activity is strong and spending is resilient, but inflation “remains elevated”

The US Federal Reserve held its benchmark interest rate at 3.75-4 per cent on Wednesday, as policymakers weighed persistently high inflation against strong economic activity and resilient spending.

The Federal Open Market Committee (FOMC) voted 10-2 to keep the target range for the federal funds rate unchanged. Two members dissented, favouring a 25-basis-point increase, which shows a split inside the committee over how forcefully to respond to inflation.

The decision follows the Fed’s 25-basis-point hike in September, which lifted the range to 3.75-4 per cent and was its first increase since 2023. Wednesday’s pause leaves borrowing costs there while the central bank assesses whether inflation is heading back towards its 2 per cent target.

In its statement, the Fed said economic activity is expanding at a strong pace and household and business spending remains resilient despite uncertainty linked partly to geopolitical developments. It also pointed to strong productivity growth and robust capital investment, and said job gains have kept pace with the workforce while the unemployment rate has changed little.

Inflation, however, remains the main worry. The Fed said inflation remains elevated and that it needs more information before deciding what policy stance will bring it back to target in a timely way.

On technical rates, the Fed kept the interest rate on reserve balances at 3.90 per cent, effective October 29. The overnight repurchase agreement rate stays at 4 per cent, and the overnight reverse repurchase agreement rate at 3.75 per cent, with a daily limit of USD 160 billion per counterparty. The primary credit rate for eligible banks borrowing directly from the Fed was also held at 4 per cent.

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