Fed Holds Rates at 3.75%-4% as Inflation Stays High

TL;DR: The Federal Reserve left its benchmark rate at about 3.9% on Wednesday, October 28, a month after raising it for the first time in three years. September inflation ran at 3.7%, according to KTVU. Markets now price about an 80% chance of another hike in December, per RTE.

PBS NewsHour led its Wednesday news wrap with the decision.

What did the Fed decide on October 28?

The Fed held. The target range for the fed funds rate stays at 3.75% to 4%, CryptoTicker reported from the central bank's statement. KTVU rounds that to about 3.9% and says the Fed, led by Chairman Kevin Warsh, raised the rate in September for the first time in three years.

The statement gave a reason for waiting. Officials said the "accumulation of more information" will help determine the right policy to bring inflation back to the 2% goal, according to KTVU.

Item	What the source reports	Source
Decision on October 28	Benchmark rate unchanged	CryptoTicker
Rate level	About 3.9%	KTVU
September inflation, year over year	3.7%	KTVU
February inflation, before the Iran war	2.4%	KTVU
Market pricing for a December hike	About 80%	RTE

The gap between 2.4% in February and 3.7% in September is why a pause still reads as a hawkish one.

Why hold when inflation is still rising?

The Fed chose to wait for data after a hike. Its chair also argues that the economy can grow faster without as much inflation, a case he has made before and one that rests on productivity gains that predate the artificial intelligence boom, according to RTE.

That is a view, not a measurement.

What does it mean for your private-market allocation?

It means the rate environment you underwrite against is not settling. A hold at about 3.9% with a December hike priced at roughly 80% suggests that borrowing costs may still be moving up when your capital is called, which is exactly when a sponsor's original assumptions get tested.

For investors in private credit, real estate and leveraged buyout funds, the rate a sponsor assumed when the deal was modeled matters a great deal. Ask whether the debt floats, when it has to be refinanced, and what return the sponsor projected at the rate in the model. AIN covered one side of this in A Fed Rate Hike Would Boost BDC Income Immediately. Here's the Catch. and the allocation angle in what a held rate means for private credit in H2 2026.

The earlier read, Fed Expected to Hold Rates as Inflation Tops Voters' Worries, laid out the expectations that this decision confirmed.

What should you watch next?

One date and one number matter. The committee next meets December 8-9, per RTE. Before then, the next inflation reading will show whether 3.7% was a peak or only a step on the way somewhere higher.

Pricing moves with every data release, so treat any single probability as a snapshot. For broader context, see Fed Turns Hawkish but Can Wait on the Next Hike and the full News & Analysis desk.

Common mistakes after a Fed hold

The first is reading a hold as a signal that cuts are coming. The Fed raised rates last month, and the market is pricing more increases, not fewer.

The second is leaving a sponsor's model unchecked. A deal whose model assumes cheaper debt than today's will look better on paper than it will in practice, and the pitch rarely points that out.

The third is treating one probability as a forecast. A market-implied chance is a price, and prices move.

FAQ

Did the Fed raise rates on October 28, 2026?

No. It held its benchmark rate at about 3.9% after raising it in September, according to KTVU. The statement said more information was needed before deciding the next step.

What is inflation right now?

Consumer prices rose 3.7% in September compared with a year earlier, according to KTVU. Monthly, the index rose 0.3% in both August and September.

Will the Fed raise rates in December?

Nobody knows. Pricing showed about an 80% chance of a December hike, per RTE, but market odds shift with every inflation and jobs report.

When does the Fed meet next?

The next policy meeting is December 8-9, according to RTE.

Your next step

Open the financial model behind any private deal you are considering and ask how its debt is priced. Most loans pay a base rate plus a spread, so have the sponsor rerun the model at the all-in rate, then again with that rate a quarter-point higher, before you commit. To get the read on the next Fed decision the day it lands, subscribe to the free AIN briefing.

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