The Fed Held at 3.75-4% on a 10-2 Vote, With Two Officials Wanting a Hike. Core CPI Is 2.6%

The Federal Reserve left its benchmark rate at 3.75 to 4 percent on October 28, but the 10-2 vote carried two ballots to raise it, and CME FedWatch put the odds of a December increase at 82.6 percent, according to Fox Business. Six weeks after a unanimous hike, the committee has split over whether one quarter point was enough.

The Fed's statement, approved 10-2, named the dissenters. Cleveland Fed President Beth Hammack and Governor Lisa Cook each preferred a quarter-point increase at this meeting. The statement called inflation "elevated" and said economic activity is "expanding at a strong pace."

A hawk's second dissent, and a governor's first

Hammack also dissented in July, for the same reason. She was one of three regional presidents outvoted 9-3 in July, alongside Neel Kashkari and Lorie Logan, who wanted the increase the full committee later delivered 12-0 on September 16. Yahoo Finance reported that Cook had not dissented before. She sits on the Board of Governors in Washington, where Hammack is a regional bank president in Cleveland.

Cook is also the official the Trump administration has tried to remove over mortgage fraud allegations. Yahoo Finance reported that the White House has asked her to testify at a private hearing next week, and that Chair Kevin Warsh said the Fed would not be involved. The administration had also urged the Fed not to raise rates before the midterm elections. Warsh said "politics played no role in the decision."

The spreadsheet disagrees with itself

Consumer prices rose 3.7 percent in the 12 months to September, the Bureau of Labor Statistics reported on October 14. Strip out food and energy and the figure is 2.6 percent. The gap is almost entirely fuel: energy prices rose 5.2 percent in September alone.

That is the case the hawks and the patient camp are both reading. The dissenters see energy costs spreading into other prices. Seema Shah of Principal Asset Management argued the Fed "has time on its side" because inflation expectations remain anchored. Both can be right about the data. They differ on whether a 2.6 percent core reading stays there if gasoline stays 34 percent higher.

Warsh gave no help on that question. He said there is "no soft inflation target and no implicit inflation target," and that conditions have tightened for some businesses and households but he is "unwilling and unable to call them tight." Kay Haigh of Goldman Sachs Asset Management said she expects the Fed to resume hikes in December. That is a forecast, not a decision, and the committee has not signaled one.

Fewer rate votes starting next year

Warsh also announced a change to the calendar. The Fed will keep eight meetings a year, but one 2027 meeting will be reserved for strategy, with no rate vote and no policy statement, according to Fox Business. In 2028 the committee plans two strategy meetings and six policy meetings. NBC News quoted Warsh saying it is important to "reserve time and space" for strategic deliberations.

The Fed has held eight scheduled meetings a year since 1981, NBC News reported, and the change would set it apart from major central banks including the Bank of England and the Bank of Japan. It does not touch December. The December 8-9 session is a full rate-setting meeting.

Two things are unconfirmed. Warsh's remarks here come from the outlets named above, not a full transcript. And none of the coverage reviewed says why Cook chose this meeting for her first dissent, so any link to the administration's effort to remove her is not established.