The Fed stood still on Wednesday, Oct. 28. Two of its twelve voters didn't want to. Governor Lisa Cook and Cleveland Fed President Beth Hammack voted for a quarter-point hike. The other ten held the benchmark rate at 3.75% to 4%.
The Fed raised rates in September. On Wednesday it waited. Chairman Kevin Warsh said market measures of expected inflation have come down since that hike, even with energy prices still high. He took that as a sign the plan is working. "I feel good about those signposts," he said. He wouldn't say what would make the Fed raise again. He did say officials would know a lot more by the next meeting, which ends Dec. 9. The Fed's statement still left the door open. It said more information would help the committee get inflation back to its 2% goal in a "timely" way. The Journal read that as a quiet nod toward another hike.
Hammack has dissented for higher rates before, most recently in July. She'd rather make small moves now than big ones later. Both dissents were widely expected. Cook's still stood out, because it was her first in more than four years on the committee. She has said the AI build-out is her top worry for next year and that it's already pushing prices up. The Journal's Nick Timiraos notes that inflation has run above the Fed's 2% goal for more than five years. This year is on track to be the second straight one with no progress. Warsh also pushed back on the idea that rates can't touch cash-rich AI builders. "Interest rates get in the cracks," he said.
What the crowd is pricing
On Polymarket, as printed in Thursday's Journal, the odds of zero rate cuts in 2026 stood at 96%. Friday's paper printed a second question. Traders there put 75% on exactly two hikes in 2026. September's counts as one, so that means one more. The only meeting left this year is the one that ends Dec. 9. The Journal's editorial board wrote Thursday that markets appear to expect another increase in December. Those are crowd prices, not forecasts. Warsh also noted that next year the Fed will vote on rates at only seven of its eight meetings.
Our read
This is Fixed Income, IN02. A Fed that's holding with a lean toward hiking is good news for the shortest, safest paper. The 13-week Treasury bill sold at 4.050% at the latest auction, by Thursday's Journal. The 26-week sold at 4.210%. Those bills come due in months, so their yields tend to follow the Fed. Long bonds sit on the other side. The 10-year Treasury yielded 5.044% on Wednesday and 4.988% on Thursday. Lock money up for 10 or 30 years and you carry the inflation risk the Fed is still fighting. Our model books hold Treasury bills (SGOV) at weight in 49 books and floating-rate paper (USFR) in 14. Long Treasuries (TLT) sit in 4 older books. Nothing added, nothing trimmed.
For your own plan, the thing this story touches is your emergency fund. Investors still expect more rate increases into next year, the Journal says. So card rates and new car-loan rates, the ones the Fed moves most, offer little relief. This week, look up what your savings or money-market account actually pays. Bankrate's average in Thursday's table was 0.46%. The latest 13-week Treasury bill sold at 4.050%. If your emergency fund earns closer to the first number, that gap is the fix. Then check the rate on any card balance you carry. It's a ten-minute job, and if the gap turns out to be big, bring it to your next review. Nobody needs a forecast to fix a leak.