ENINTEREST RATES & COMMERCIAL BORROWING · OCTOBER 29, 2026
Federal Reserve Holds Its Policy Rate as Inflation Remains Elevated
The Federal Reserve maintained the federal funds target range at 3.75% to 4.00% on October 28 while describing economic activity as strong and inflation as still elevated.
What the Federal Reserve decided on October 28
Source publication date: October 28, 2026. The Federal Open Market Committee maintained the federal funds target range at 3.75% to 4.00% and said it would continue maintaining ample reserves in the banking system. The decision does not directly set every commercial loan rate, and it does not guarantee that borrower pricing will remain unchanged.
- 01Target range was maintained
- 02Inflation remains elevated
- 03Two members preferred a 25-basis-point increase
The statement described strong activity and persistent inflation
The Committee said economic activity was expanding at a strong pace, domestic spending was resilient, productivity growth was strong, capital investment was robust, job gains had kept pace with the workforce, and unemployment had changed little. It also said inflation remained elevated and that additional information would help determine the policy stance needed to return inflation to the 2% goal.
The vote showed disagreement about the appropriate stance
The statement passed by a 10–2 vote. Two members preferred to raise the target range by 25 basis points. The implementation note maintained the interest rate on reserve balances at 3.90% and the primary credit rate at 4.00%. Divergent views and incoming data can affect expectations for Treasury yields, SOFR, Prime, lender funding costs, credit spreads, and fixed-rate execution differently.
Practical borrower takeaway
Confirm the exact index, spread, floor, reset frequency, amortization, maturity, fees, prepayment terms, lock period, and quote expiration for each proposal. Recalculate debt service at the current quote and at higher benchmark or wider-spread cases. Preserve liquidity and covenant headroom, and avoid timing an acquisition, refinance, or equipment purchase solely around an assumed future rate change.
Borrowers should use current lender quotes and model Prime, SOFR, Treasury, spread, floor, and reset risk rather than assuming the next policy move or an immediate decline in commercial loan pricing.
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