Warsh’s Waiting Game: Fed Holds at 3.75–4% as Two Dissenters Demand a Hike

By Geostrategic Media Desk Team | October 29, 2026

The Federal Reserve did what markets expected on Wednesday, and still left investors with more questions than answers. It held its benchmark rate at 3.75 to 4 percent, but two of its twelve voting members wanted to raise it, and its chairman declined to say what comes next.

What the Fed decided

The Federal Open Market Committee voted 10 to 2 to leave the federal funds rate unchanged, where it has stood since a quarter-point increase in September. The statement upgraded the economy, describing activity as expanding at a “strong pace” rather than the “solid” pace of the previous meeting, and said inflation remains elevated. It added that the committee was waiting for more information before acting further.

Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented, both preferring a 25-basis-point increase. Two dissents in favour of tightening are a clear sign that part of the committee sees the inflation fight as unfinished.

Warsh: no politics, no promises

Chair Kevin Warsh used his press conference to push back on suggestions that next week’s US midterm elections shaped the decision, saying politics played no role. Asked why the Fed did not raise rates when growth is strong and inflation is high, he described controlling inflation as a gradual process and expressed confidence that it can return to the 2 percent target without damaging the economy.

He also announced that, from next year, the Fed will hold fewer meetings at which interest rates are set. Analysts read this as consistent with his preference for less forward guidance. “Less Fed communication could mean more market volatility,” one Wells Fargo strategist warned. Warsh again avoided hinting at December, which some traders had hoped for.

Markets: calm on the surface

US stocks closed modestly higher, though they gave back some gains late in the session. The bond market was more revealing. The 2-year Treasury yield slipped about 3 basis points to roughly 4.71 percent, while the 10-year rose to about 5.02 percent and the 30-year to about 5.35 percent, steepening the yield curve. That pattern suggests investors expect short-term rates to stay under control for now, but are demanding more compensation for inflation risk over the long run.

According to the CME FedWatch tool, traders now put the probability of a quarter-point hike at the 9 December meeting at about 85 percent, up from roughly 78 percent a day earlier.

Foresight: December is the real decision

Today’s hold was a pause, not a change of direction. Three forces will shape the next move. The first is energy: with oil near $100 and European gas near four-year highs, the Middle East war keeps feeding inflation that interest rates cannot easily fix. The second is the committee itself, where two hawkish dissents make a December hike easier to justify and a cut almost unthinkable. The third is communication. With fewer meetings and little forward guidance, markets will be trading on data releases and speeches rather than signals, which raises the risk of sharp repricing.

What to watch next:

• The next inflation reading, and whether energy prices ease or climb after the Gulf talks.
• Whether more committee members join Cook and Hammack in calling for a hike.
• How the US midterm result on 3 November affects the debate over Fed independence.
• Details of the reduced meeting calendar and what they mean for market volatility.

Sources: CNBC, CNN, Yahoo Finance, Kiplinger, ATFX and Admiral Markets reporting, 28–29 October 2026. Figures may be revised.