The Fed report
highlights from The FOMC Policy Update
OCTOBER 29, 2026
Yesterday, the Federal Open Market Committee (FOMC) released its statement and held a press conference following the conclusion of its October meeting.
FOMC Policy Updates: Key Highlights
- Fed funds target range unchanged, with two dissents. As generally expected, the FOMC maintained the target range for the federal funds rate at 3.75-4.00% at its October meeting, following the 25 basis point rate hike in September. The decision was in line with market expectations, as fed funds futures indicated an approximately 90% probability of a hold heading into the meeting. The 10-2 decision drew dissents from Fed Governor Lisa Cook and Cleveland Fed President Beth Hammack, who both preferred to raise the target range for the federal funds rate by 25 basis points.
- Statement language points to a data-dependent pause. The Fed’s October statement was largely unchanged from September, with two notable revisions. The FOMC upgraded its characterization of economic activity, which is now expanding at a “strong pace” relative to a “solid pace” in September. The statement also included new language that “the accumulation of more information will help the Committee determine the policy stance appropriate to ensure a timely return of inflation” to the 2% goal.
notable commentary
- “It’s equally important we reserve time and space, as an intellectually diverse group, for strategic deliberations.” In his opening remarks, Chairman Warsh announced that, while the FOMC will continue to meet eight times per year, one of its meetings in 2027 will focus exclusively on broad monetary policy strategy, “with neither a vote on the federal funds rate nor a policy statement anticipated.” He expects two such strategy meetings in 2028, which would reduce the number of policy-setting meetings to six. He framed this decision as an “institutional choice” that will allow the FOMC to assess economic data over longer time horizons, improve the quality of the Committee’s deliberations, and “get the conduct of monetary policy on the right track.” While this is a notable change, it is consistent with the focus of the Fed communications task force that Chairman Warsh announced at his first press conference in June, which is reviewing “communications broadly, press conferences, dots, meetings, and the like.”
- “We’ve put in place what I describe as new monetary medicine.” When asked why the FOMC did not raise rates at this meeting, Chairman Warsh described a package of actions taken by the FOMC since he became Chairman earlier this year: reaffirming the 2% inflation target and rejecting a “soft” inflation level, taking responsibility for persistent inflationary challenges, and acting in September to “remove a dose of accommodation.” He pointed to inflation compensation and inflation expectations as signposts that are “going in the right way,” while acknowledging that the Fed has not yet achieved price stability. Responding to questions about a potential rate hike in December, Chairman Warsh once again declined to provide forward guidance, stating, “I don’t believe in forward guidance absent exigent circumstances, absent a crisis,” and “I also don’t believe in prejudging meetings.”
- “While overall financial conditions are tighter, I’m unwilling and unable to call them tight.” Chairman Warsh emphasized that the FOMC continually assesses the state of the economy, in his words, “interrogating reality,” and reiterated an economic backdrop that pairs strong growth, fueled primarily by tech investment, and positive employment trends with inflation that has been running well above the 2% target for almost six years. He described the effects of the September rate hike on financial conditions as broadly “consistent with [his] expectations” and noted that the Fed has “started to see some changes in financial and credit conditions,” with “market participants…becoming somewhat more discerning in their capital allocations.” Consistent with his messaging since becoming Chairman, he reinforced that the Fed “will deliver price stability…no ifs, ands, or buts” and acknowledged that, while near-term inflation expectations have moved higher, most longer-horizon measures reflect confidence that the Fed will deliver.
- “These five task forces are hard at work.” Chairman Warsh provided an update on the five task forces announced in June, indicating that “some, but not all, of the groups will probably hit their deadline” of producing initial reports by year-end. He noted that the task force on productivity and jobs will hold a field hearing on November 16 and indicated that the balance sheet task force’s recommendations will be brought to the FOMC “probably early in the first quarter,” though any changes related to the balance sheet are “unlikely to have any material effect on this policy conjuncture.”
Market Reaction
- A more muted market reaction. In contrast to the last several Fed decision days, the equity market reaction was relatively calm. While the S&P 500 and Nasdaq Composite were choppy during Chairman Warsh’s press conference and the remainder of the afternoon session, both indices rallied into the close, each ultimately closing up 0.3%. It marked the first time the S&P 500 closed higher on a Fed decision day since the December 2025 meeting. In the fixed income market, yield trends varied across the curve: the 2-year Treasury yield declined 4 basis points on the day to 4.70%, the 10-year Treasury yield increased 2 basis points to 5.02%, and the 30-year Treasury yield increased 3 basis points to 5.35%. Following the meeting, fed funds futures are pricing in an approximately 80% probability of a rate hike at the December meeting, compared to a 90% probability ahead of the Fed decision.
Important Disclosures
This report includes the thoughts and opinions of AGNC Investment Corp. (“AGNC”) and is being shared for informational purposes only and should not be construed as investment advice. Neither the Federal Reserve nor any other third party has contributed to or been involved in AGNC’s preparation of these materials. AGNC does not endorse or adopt the views of the Federal Reserve or any third party.
Investment in AGNC involves risks and uncertainties that may cause future performance to vary from historical results or any forward-looking commentary provided. Please refer to our annual and quarterly reports on file with the SEC and available on our website or at www.sec.gov for more information about AGNC, including material risks, other factors that may affect future performance, and notices regarding forward-looking statements. AGNC disclaims any obligation to update or revise any forward-looking commentary. Stockholders and other interested parties may sign up to receive AGNC’s news, perspectives, and other types of email alerts by clicking the Subscribe link.