Federal Reserve Holds Interest Rates at 3.75% to 4%

The Federal Reserve System voted on October 28, 2026, to maintain its benchmark interest rate at 3.75% to 4%. This decision follows a quarter-point increase in September, which represented the first rise in borrowing costs in more than three years. The decision was not unanimous, as two members of the committee dissented.

The Federal Open Market Committee reported that economic activity is expanding strongly, though inflation remains elevated. While the central bank does not set certificate of deposit rates directly, the benchmark continues to influence bank yields. Current market data shows a divergence in these returns, with average one-year CDs offering 2.18% APY compared to 1.83% for five-year terms.

Market analysis suggests a rate hike remains likely in December. However, equities are expected to remain resilient due to strong economic growth and significant earnings gains among mega-cap technology companies. S&P 500 third-quarter earnings growth reached 29.5%, and AI-driven revenue is expected to help the market absorb higher borrowing costs despite risks from a softening labor market.