• The Fed decided to hold rates steady in October as expected, with two members dissenting.
• The FOMC's main issue is inflation, which has been elevated for years.
• Next year will be the start of a meeting change so that the FOMC can have "strategic deliberations."

The second-to-last Federal Open Market Committee meeting in 2026 has come and gone, with some new information unveiled at Chair Kevin Warsh's press conference.

The FOMC decided in its meeting to hold interest rates steady on Wednesday, although two members dissented.

That comes as the inflation rate has been above the Fed's 2% target, while unemployment remains low. Warsh also announced a shake-up to next year's FOMC meeting plans.

Here are three large takeaways from Wednesday's Fed meeting.

Two dissents

While last month's 25-basis-point hike was a unanimous 12-0 decision, the October vote to hold rates steady was 10-2. Lisa Cook and Beth Hammack wanted to hike rates by 25 basis points again.

"The skew is toward tightening, and today's decision reads as a disagreement over timing rather than over destination," Jason Pride, chief of investment strategy and research at Glenmede, said in commentary.

Inflation remains a problem

Warsh detailed some positives about the employment side of the dual mandate, including low four-week moving average unemployment claims, a lower jobless rate than a year prior, and better job growth than last year.

Meanwhile, the other side of the dual mandate, price stability, is more of a concern. Inflation has remained above the Fed's 2% target. The Fed hiked rates in September to try to help that. Warsh said at Wednesday's press conference that the FOMC's discussion has been largely focused on price stability.

"Energy and related prices have moved higher again in recent weeks," he said. "And our job is to ensure that relative price changes in some sectors do not broaden out across the economy and that inflation expectations remain as they are anchored."

Warsh said quashing inflation isn't about a fixed date on a calendar nor an isolated data point.

"If it were about those two things, this job would be easier, and we wouldn't be suffering from nearly six years of inflation above target," he said.

Meeting switchup

Next fall will look different. Warsh announced at the FOMC press conference that there will still be eight meetings next year, as usual, but one of them will "focus exclusively on broad monetary policy strategy with neither a vote on the federal funds rate nor a policy statement anticipated." He expects that in 2028, two of those meetings will be like this.

"A change to the Fed's meeting schedule is significant. That is a dollar killer," Juan Perez, senior director of trading at Monex USA, said in commentary. "Less information is a big problem for forward guidance. It also seems like an admission from the Fed that the economy is not firing on all cylinders."

Warsh said the change was discussed over a couple of meetings, and the reason behind making it is because it's important to have time and space to make "strategic deliberations," looking over longer time horizons, and thinking through large questions.

"It's yet another change to get the conduct of monetary policy on the right track," he said.

The committee is scheduled to meet once more before the year ends in December, which means they will have a slew of economic data to help make their last decision. Traders expect a rate hike to be the likely outcome of that last meeting.

• As expected, the Federal Reserve held rates steady on Wednesday.
• Fed Chair Kevin Warsh said the Fed is working toward price stability and lower inflation.
• Smart people in business and finance expected the hold, and estimate a hike in December.

The Federal Reserve held interest rates steady as was widely expected. The rate remained unchanged after a 10-2 vote, where 2 officials voted to hike rates by 25 bps.

Fed chair Kevin Warsh, who began his term leading the central bank in May, said the Fed is working to deliver future price stability and quash inflation during the Federal Open Market Committee press conference following the hold announcement.

"The period right in front of us is information rich," Warsh said.

He added: "We're going to be able to figure out what's the appropriate protocol, as part of this package that we started to deliver five months ago, to deliver price stability."

In September, the Fed opted for a quarter-point increase — the first hike in three years — aimed at tackling rising inflation. The decision to hold rates comes less than a week before US midterm elections, where the country's affordability crisis and rising energy and oil prices are fresh on voters' minds. Warsh said politics played no role in the decision.

Here is how smart people in business and finance are reacting to the hold — and why many expect another rate hike in December.

Kay Haigh, global head and chief investment officer of fixed income and liquidity solutions at Goldman Sachs Asset Management

Haigh is among the Fed watchers who expect a hike to be the likely outcome of the final Fed meeting of the year.

"We expect the Fed to resume rate hikes in December," Haigh said. "September's strong CPI print is a reminder that upside inflation risks remain, and the Fed is likely to look to take out further insurance."

Steve Rick, chief economist at TruStage

Rick said Wednesday's decision to keep rates steady made sense after September's first hike since July 2023.

"Monetary policy works with long and variable lags, so the Fed will want to see how the higher rates already in the system are affecting consumer spending, business investment and hiring before determining whether additional tightening is necessary," he said. "There's no need to rush."

Andrew Davis, head of investment strategy at Bryn Mawr Trust and a former BLS analyst

Davis said the Fed's wait-and-see approach makes sense as inflation remains above the Fed's 2% target and the job market has cooled without "showing the kind of widespread deterioration we'd typically associate with a recession."

"One thing worth watching is how the bond market responds," Davis said. "The Fed controls short-term interest rates, but longer-term yields reflect a much broader set of forces, including inflation expectations, economic growth and Treasury supply. With the 10-year Treasury yield around 5%, financial conditions have already tightened considerably. Higher borrowing costs can do some of the Fed's work without another rate hike."

Elizabeth Renter, the lead economist at Life360 and a former senior economist at NerdWallet

"The Fed's choice to hold today will have little noticeable impact for everyday household life," she said. "But consumers paying attention could feel let down by the seeming inaction on inflation from the Central Bank."

Renter suggests that families feeling financial strain cut back on discretionary expenses, as prices are likely to remain high. Those not feeling as much strain could put some money into extra savings.

Peter Boockvar, chief investment officer at One Point BFG Wealth Partners

Boockvar said markets would likely be on the lookout for unofficial guidance on rates from central bankers in the days and weeks ahead. Fed Chair Kevin Warsh has leaned away from the central bank issuing official formal guidance. But other Fed officials have been more forthcoming about their views on monetary policy lately, such as by speaking about rates in public remarks.

"I'm sure again Chair Warsh will dance around making any commitment and we'll be more reliant on the upcoming speeches and comments that his colleagues give," Boockvar wrote in a note to clients on Substack.

Seema Shah, chief global strategist at Principal Asset Management

Seema Shah said the hold was a good call. Amid global and economic uncertainty, the Fed has time to gather more data. Yet, she said hikes in December and early 2027 are expected.

"AI may be booming, but the broader economy is not firing on all cylinders, and elevated geopolitical uncertainty argues against rushing another hike," she said. "But the direction of travel remains clear. The Fed is still taking back some of last year's rate cuts, and the two dissents underline that tightening bias."

Brian Coulton, chief economist at Fitch Ratings

Brian Coulton said the Fed is holding steady for more information before "pulling the trigger again." He also expects another hike in December, based on economic factors indicating "upside risks to the US inflation outlook."

"With 2 of the 12 voting members opting for a hike, and a more bullish assessment of current growth trends, it looks like we will get another hike in December," Coulton said. "The statement characterized economic activity as expanding at a 'strong pace' rather than the 'solid pace' description used in September."