Fed holds rates at 3.75%-4% as strong growth and inflation fuel December hike bets

Oct 30, 2026 07:56 (7h ago)

The Federal Reserve held its benchmark rate at 3.75%-4% in a 10-2 vote, with Lisa Cook and Beth Hammack favoring an immediate increase.
US GDP grew 3.4% annualized in the third quarter, while consumer spending rose 3.8% and business-equipment investment jumped 20.9%.
September PCE inflation reached 3.6%, and markets priced 71.4% to roughly 80% odds of a quarter-point December hike.

The Federal Reserve held its benchmark interest rate at 3.75%-4% in a 10-2 decision, while strong third-quarter growth and persistent, broad-based inflation kept a December increase in focus. US GDP grew at a 3.4% annualized rate in July-September, supported by 3.8% consumer-spending growth and a 20.9% rise in business-equipment investment. The Personal Consumption Expenditures Price Index, the Fed's preferred inflation gauge, rose to 3.6% in September from 3.4% in August, well above its recent low of 2.3% in March 2025. Fed Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented in favor of an immediate quarter-point increase. Markets assigned between 71.4% and roughly 80% odds to a 25-basis-point hike at the December 8-9 meeting, depending on the measure and timing, and anticipated further tightening next year. Fed Chair Kevin Warsh said artificial-intelligence-related productivity gains could be expanding supply and that the economy was not too hot, while economists including KPMG's Diane Swonk and BNY Investments' Vincent Reinhart warned inflation remained persistent and further hikes might be needed.