The Fed Held Rates on Oct 28. Why Steady Rates May Not Last

Key takeaways

• Good news: the Federal Reserve held its key rate steady at 3.75% to 4% on Oct 28. No cut, no hike.
• Bad news: steady rates may not last. Right after the announcement, CME FedWatch showed about an 86% chance of a quarter point hike at the Dec 9 meeting.
• The Fed's tone got tougher. Its statement called the economy "strong," up from "solid" in September, and said inflation "remains elevated."
• Mortgage rates are already up. The 30-year fixed averaged 7.33% heading into the decision, up from 7.12% a month earlier, per the Mortgage News Daily rate index.
• Plan on today's rates or a bit higher. If the payment works now, it may be worth moving forward. If it doesn't, re-check your numbers after the new year.

Table of contents

1. What the Fed decided
2. Two things we learned from the statement
3. How the market reacted
4. What this means for you
5. What it means locally
6. What buyers and sellers should do now
7. What Warsh said in the press conference Q&A
8. FAQs
9. Your next step in Southern Indiana

---

TL;DR: The Fed held rates steady on Oct 28, which most people expected. But the Fed now calls the economy strong, still calls inflation elevated, and markets are betting on a hike in December. Mortgage rates have already moved up. If you're buying soon, plan on today's rates or slightly higher.

How we got these numbers

• Fed decision and wording: Federal Reserve statements, Sept 16 and Oct 28, 2026.
• Warsh quotes: Oct 28 press conference. Opening statement: Fed preliminary transcript. Q&A: Associated Press video (no full Fed transcript yet).
• December hike odds, 10-year yield: CME FedWatch and CNBC, Oct 28 snapshot.
• Mortgage rates: Mortgage News Daily 30-year fixed daily index, Oct 27 vs a month earlier.
• Local unemployment: U.S. Bureau of Labor Statistics, September 2026. Monthly, preliminary, not seasonally adjusted.

---

What the Fed decided

Short answer: it held its key rate at 3.75% to 4%. That's the good news. The bad news is that steady rates may be short lived.

The Federal Reserve's policy committee voted 10 to 2 to keep the federal funds rate where it has been since its September hike. In plain terms, the Fed didn't cut rates and didn't raise them. The two members who voted no, Governor Lisa Cook and Cleveland Fed President Beth Hammack, wanted to raise rates by a quarter point at this meeting.

The federal funds rate is what banks charge each other for overnight loans. It isn't your mortgage rate. But it shapes what lenders pay to borrow, and the Fed's outlook moves the bond market that mortgage rates follow. Our guide to what the Fed can and can't do to your mortgage rate explains how that works.

Two things we learned from the statement

Short answer: the Fed thinks the economy is strong, and it still thinks inflation is too high.

1. The economy is now "strong." The Fed's Sept 16 statement said economic activity was expanding at a "solid" pace. The Oct 28 statement says it's expanding at a "strong" pace. That one word matters. A strong economy gives the Fed room to raise rates without worrying as much about slowing things down.
2. Inflation "remains elevated." No kidding. The Fed has kept that phrase in its statements, and Chair Kevin Warsh made it the center of his press conference.

In his opening statement, Warsh said "real activity is clearly pointing in the right direction. That's good news. But inflation is too high. Energy and related prices have moved higher again in recent weeks."

He also said Americans are "still dealing with inflation that has been running above the Committee's objective for close to 6 years. It's our responsibility to get inflation down."

On jobs, he was upbeat. He said "on the employment side of the Fed's dual mandate, conditions are quite positive," and that the "four-week moving average of unemployment insurance claims continues to run at the lowest level in generations."

He also made it clear the Fed is ready to move: "We've made clear our readiness to act as circumstances require, and we have shown our willingness to act."

How the market reacted

Short answer: the market heard "December hike."

1. The 10-year Treasury yield ticked higher. CNBC reported the 10-year yield was up more than 5 basis points (0.05 point) at about 5.05% after the decision. Mortgage rates tend to follow the 10-year yield.
2. Hike odds jumped. CME FedWatch put the odds of a quarter point hike at the Dec 9 meeting at about 86% on Oct 28, up from about 78% the day before.

Those odds are a snapshot of what traders expect, not a promise. They can move quickly when new inflation or jobs data comes out.

What this means for you

Short answer: rates will probably trend higher into December, so mortgage costs for new buyers are likely to stay elevated for the rest of the year.

First: the hold wasn't a surprise

It's not surprising the Fed held steady despite its concern about inflation. In our view, based on history, the Fed has tended to avoid changing rates at a meeting shortly before an election, although in extreme economic conditions it has both raised and lowered rates in the days before a vote. The midterm elections are Nov 3. Most experts expected this meeting to be a hold well in advance, and futures markets priced it that way.

This is our own view, not the Fed's. Warsh was asked about politics at the press conference, and his answer is in the Q&A section below.

Second: rates will probably trend higher into December

Barring new data or a change in the economy, interest rates will probably keep trending higher as we approach the December meeting. The Fed is still worried about inflation and has a stated goal of bringing it down, so a hike of at least a quarter point in December is widely expected.

That doesn't guarantee mortgage rates will rise. Mortgage rates follow the bond market, not the Fed directly, and new data could still push them lower. But higher is not a bad bet. Because of this, mortgage costs for new buyers are likely to stay elevated for the rest of the year.

Here's what the recent move looks like on a typical loan. On a $250,000, 30-year fixed loan:

Rate	Monthly principal and interest
7.12% (about a month ago)	$1,683.45
7.33% (heading into the Oct 28 decision)	$1,719.03
Difference	about $36 a month, about $427 a year

This is an Agent Intro illustration using the standard loan payment formula and the Mortgage News Daily rate index averages. Your rate depends on your credit, down payment, loan type, and points. Taxes and insurance are extra.

Finally: inflation progress takes time, and the world isn't calm

At the press conference, Warsh said, "I'm encouraged by the progress we've made in a short period of time." He also agreed the Fed hasn't reached price stability yet: "you're right about that. But we're working on it." Rate changes take time to work, and a lot depends on major events around the globe, including the conflict with Iran and higher energy prices. On Oct 27, The Wall Street Journal reported that the U.S. has told several Gulf Arab countries to be prepared for a short, intense military campaign after the U.S. midterm elections, citing people briefed on the conversations. The White House declined to comment on military plans. Energy and geopolitical news like this can keep inflation and rates elevated, so we don't expect this picture to change soon.

What it means locally

Short answer: local jobs are still solid, so the bigger pressure on buyers here is the monthly payment, not paychecks.

The Fed sees a strong job market nationally. Locally, unemployment has edged up from a year ago but is still low. In September 2026, according to the U.S. Bureau of Labor Statistics:

Area	Sep 2026	Sep 2025
Clark County, IN	3.7%	3.4%
Floyd County, IN	3.6%	3.4%
Harrison County, IN	3.6%	3.3%
Jefferson County, KY	4.6%	4.3%
United States	4.0%	4.3%

These figures are not seasonally adjusted, so compare the same month across years. September 2026 is preliminary and will be revised. October 2025 county data was never published by BLS.

For a closer look at local prices and supply, see the Clark County Q3 2026 housing market and the Southern Indiana county comparison.

What buyers and sellers should do now

Short answer: buyers should plan on today's rates or slightly higher. Sellers should price for the market we have now.

If you're buying soon

• Plan on the current rate, or a little higher. Run your budget at today's rates plus a small cushion for the coming weeks.
• If the payment works, move forward. Talk with a licensed loan officer and a Real Estate Agent about next steps, including how a rate lock works and what it costs.
• If it doesn't work, wait and re-check. If the payment at current rates doesn't fit, it may make sense to wait until the calendar turns, then re-evaluate.
• Ask about seller help. Our post on how buyers still negotiate at 7% rates covers closing cost help and rate buydowns.

If you're selling

• Price for today's market. Buyers are shopping with higher payments, so pricing right from the start matters more. See why overpriced homes sit.
• Expect a bit more time. We expect days on market to run a little longer than earlier in the year. Plan your timeline with that in mind.
• Consider buyer incentives. Closing cost assistance can help a buyer whose budget is tight.

Find the right Real Estate Agent

Agent Intro is an introduction and referral service of Aire Realty, LLC, an Indiana-licensed real estate brokerage, serving home buyers and sellers in Southern Indiana and Greater Louisville. Fill out a short Match Profile. A member of our team will review your Match Profile, then introduce you to a vetted local Real Estate Agent who fits your plans. You are never obligated to hire anyone.

Planning a move this winter? See how we help at Buying or Selling, or start your Match Profile.

What Warsh said in the press conference Q&A

Short answer: he made no promise about December, said the Fed will get inflation down, and said politics played no role.

1. No promise about December. Asked whether there's still support for another hike this year, Warsh said he won't give advance signals about future rate moves (what the Fed calls forward guidance): "I don't believe in forward guidance absent exigent circumstances, absent a crisis." He added, "I also don't believe in prejudging meetings," and "a lot of things can happen." He also said beating inflation isn't tied to one date on the calendar or one data point.
2. Inflation is still the top job. "We will deliver price stability. No ifs, ands, or buts." He also said "there's no soft inflation target," and that the target is 2% as measured by the PCE price index.
3. He sees what drivers see at the pump. Consumers "go to the gas station, too, and they see that prices are up," he said, which has pushed up what people expect inflation to be in the very near term.
4. Tighter borrowing means the policy is working, he said. Financial conditions means how easy or hard it is to borrow and invest. In his opening statement, Warsh said credit conditions have "tightened for some businesses and households, much as we would expect." In the Q&A he added, "We are tightening financial conditions," and "that tells me that policy is working." He also said the goal "isn't to throw sand in the gears of the economy and throw people out of work."
5. Politics played no role, he said. Asked whether the Nov 3 midterms factored into the decision, Warsh said "politics played no role in the decision" and that he "didn't hear an utterance about politics" in two days of meetings.

What this means for mortgage rates (our view, not Warsh's). Warsh didn't talk about housing or mortgage rates. Our read: mortgage rates are one of the household borrowing costs that tighter conditions push on. Warsh wouldn't commit either way on December, and markets still expect a hike, so we don't expect much relief on mortgage rates before the new year.

---

FAQs

Did the Fed raise rates on Oct 28, 2026?

No. The Fed held the federal funds rate at 3.75% to 4% in a 10 to 2 vote. The two dissenters wanted a quarter point hike.

Will the Fed raise rates in December 2026?

Markets think it's likely. On Oct 28, CME FedWatch showed about an 86% chance of a quarter point hike at the Dec 9 meeting. That can change with new inflation and jobs data.

Will mortgage rates go up after the Fed decision?

Not guaranteed, but likely in the near term. The 10-year Treasury yield rose after the announcement, and the 30-year fixed was already 7.33%, up from 7.12% a month earlier.

Should I buy a house now or wait?

If the payment works at today's rates, or slightly higher, it may make sense to move forward. If it doesn't, consider waiting until the new year and re-checking your numbers.

What should sellers expect this fall?

Higher payments squeeze buyer budgets, so price for the current market. We expect homes to take a little longer to sell than earlier in the year.

---

Your next step in Southern Indiana

• If you're buying in the next few months: run your budget at today's rate plus a small cushion, then start a buyer Match Profile. A member of our team will review your Match Profile.
• If you're buying your first home and the payment feels tight: ask about seller help before you write an offer. Read: how buyers still negotiate at 7% rates.
• If you're waiting until the new year: re-check your numbers after the Dec 9 Fed meeting. Read: what the Fed can and can't do to your mortgage rate.
• If you're selling this winter: price for buyers paying today's rates, not last spring's. Start a seller Match Profile.

---

Disclosure: Agent Intro earns a referral fee when an introduction leads to a closed transaction. Full details are on our Disclosure page.

This post is general information, not financial, legal, tax, or lending advice. Rates, market odds, and figures change daily. Talk to a licensed mortgage professional about your situation before you act.

---

Data note: Fed decision, vote, and statement wording: Federal Reserve FOMC statements, Sept 16 and Oct 28, 2026. Warsh opening statement quotes: Federal Reserve preliminary transcript of the Oct 28, 2026 press conference opening statement. Warsh Q&A quotes: Oct 28, 2026 press conference video, Associated Press livestream; the Fed had not posted the full transcript when this was written. 10-year Treasury yield: CNBC, Oct 28, 2026. December hike odds: CME FedWatch as reported by CNBC and Finimize, Oct 28, 2026. 30-year fixed rate averages: Mortgage News Daily rate index, as reported by CNBC, Oct 28, 2026. Iran reporting: The Wall Street Journal, Oct 27, 2026. Local unemployment: U.S. Bureau of Labor Statistics, Local Area Unemployment Statistics, not seasonally adjusted, September 2026 preliminary. Payment example: Agent Intro illustration, standard amortization formula, principal and interest only.