--- title: "Fed Holds Rates With Two Votes to Hike: What It Means for Mortgage Rates" description: The Fed held rates at 3.75% to 4% with two votes to hike, and PCE inflation hit 3.6%. Here is what it means for mortgage rates and a December hike. image: https://45730973.fs1.hubspotusercontent-na1.net/hubfs/45730973/ChatGPT%20Image%20Jul%2030%2c%202026%2c%2011_17_27%20AM-1-1.png --- [NateLoans](https://nateloans.com/) [About](https://nateloans.com/#about) [Loan Types](https://nateloans.com/#loans) [Calculators](https://nateloans.com/#tools) [How It Works](https://nateloans.com/#process) [Reviews](https://nateloans.com/#reviews) [Blog](https://nateloans.com/blog) [Contact](https://nateloans.com/#contact) [(617) 945-3632](tel:6179453632) [Get Pre-Approved](https://mobile.fairwaynow.com/homehub/signup/nate.moghadam@FAIRWAYMC.COM) # Fed Holds Rates With Two Votes to Hike: What It Means for Mortgage Rates October 29, 2026 Nate Moghadam The Federal Reserve held interest rates steady on Wednesday, October 28, but the vote was not unanimous, and the message was not a comforting one. Two Fed officials wanted to raise rates right away. On Thursday morning, the Fed's preferred inflation report came in at 3.6 percent. Markets now see a rate hike in December as very likely, and the 10-year Treasury yield, which mortgage rates follow closely, is back above 5 percent. Here is what happened, what it means for mortgage rates, and what buyers and homeowners should watch next. This post reflects conditions as of the morning of Thursday, October 29, 2026. ## The Numbers at a Glance | Item | Result | | --- | --- | | **Fed decision** | Held at 3.75% to 4.00% | | **Vote** | 10 to 2, with both dissenters wanting a hike | | **September PCE inflation, yearly** | 3.6%, in line with forecasts | | **September core PCE, yearly** | 3.1% | | **Chance of a December hike** | about 85%, up from about 73% a day earlier | | **10-year Treasury yield** | about 5.02% to 5.04% after the decision, versus about 4.95% a week earlier | ## What the Fed Did The Fed kept its target range at 3.75 to 4.00 percent, where it landed after the quarter point hike in September. The vote was 10 to 2. Governor Lisa Cook and Cleveland Fed President Beth Hammack both voted against the decision because they preferred to raise rates another quarter point. The Fed's statement was direct about the economy. It said activity "is expanding at a strong pace" and that "inflation remains elevated." It did not promise any specific next move. Reports from Chair Kevin Warsh's press conference say he declined to signal what the Fed will do in December and said he does not believe in forward guidance outside a crisis. In plain terms, the Fed is leaving the door open to another hike and is not telling anyone what it will do. ## What the Inflation Report Showed On Thursday morning, the Commerce Department released September's PCE inflation report. PCE is the inflation measure the Fed pays closest attention to. Headline PCE rose 3.6 percent from a year earlier, and core PCE, which leaves out food and energy, rose 3.1 percent. Both matched what economists expected, and both are well above the Fed's 2 percent goal. Higher energy prices, tied to tensions in the Middle East, are a big reason for the headline number. Economic growth also beat expectations, and jobless claims fell, which is more evidence that the economy is running strong rather than slowing down. ## How Markets Reacted Markets took the Fed's message as a reason to price in more tightening. Futures now put the chance of a quarter point hike at the December 8 and 9 meeting at about 85 percent, up from about 73 percent the day before. The 10-year yield rose back above 5 percent, to roughly 5.02 to 5.04 percent after the decision. A week ago, the 10-year had fallen to about 4.95 percent, its lowest close in a month, during a stock market selloff. That dip has now partly reversed, which is the same pattern we saw earlier in October. I covered the earlier move in [Mortgage Rates Drop as the 10-Year Yield Falls Below 5%](https://nateloans.com/blog/mortgage-rates-10-year-below-5-percent-october-2026). ## What This Means for Mortgage Rates Mortgage rates follow the 10-year yield, but not one for one, so the pullback in rates that lenders passed along last week may be fading. The main message from the Fed and from this morning's data is that inflation is still high, growth is still strong, and another hike is more likely than not. That is not the backdrop for a steady slide in mortgage rates. Nobody can predict where rates go from here. Energy prices, the stock market, and the next inflation reports can all move yields quickly in either direction. What the Fed and the data do suggest is that waiting for a big drop is a risky plan. ## What to Do If You Are Buying or Refinancing - **If you are under contract and floating,** now is a good time to talk to your lender about locking. My guide on [when to lock your mortgage rate](https://nateloans.com/blog/when-to-lock-mortgage-rate-2026) walks through the tradeoffs. - **If you already locked,** ask whether your lock includes a float down, which lets you lower your rate once if rates improve enough before closing. At Fairway, it is free when rates improve by a quarter point or more. I explain how it works in [how a mortgage float down works](https://nateloans.com/blog/mortgage-float-down-explained). - **If you are still house hunting,** get updated numbers and a pre-approval that reflects today's rates, so you know your real budget. - **If you are waiting for a better rate,** understand that a rate drop can fade within days, as this month showed. Waiting is a bet, not a plan. ## What to Watch Next - **November 10: October CPI.** Another hot inflation number would strengthen the case for a December hike. - **December 8 and 9: the next Fed meeting.** This is where markets expect a quarter point hike. I covered how the earlier odds shifted in [October Fed hike odds](https://nateloans.com/blog/october-fed-hike-odds-2026). - **Energy prices.** Oil has been a major driver of inflation and of bond market moves this month. **Want to see where your numbers stand after this week?** [Get a free rate quote](https://nateloans.com/rate-quote) or [book a free 15 minute call](https://calendly.com/natemoghadam/homebuyer-consultation) and I will walk you through your options. ## Frequently Asked Questions **Did the Fed raise or lower rates on October 28?** Neither. The Fed held its target range at 3.75 to 4.00 percent. Two officials voted for a quarter point hike. **Will the Fed raise rates in December?** Markets currently see about an 85 percent chance of a quarter point hike at the December 8 and 9 meeting. That could change with new inflation and jobs data. **What is PCE and why does the Fed care about it?** PCE measures how much prices are rising for the things consumers buy. The Fed's 2 percent inflation goal is based on it. September's reading was 3.6 percent headline and 3.1 percent core. **Do Fed decisions set mortgage rates directly?** No. The Fed sets a short term rate. Mortgage rates track longer term yields like the 10-year Treasury, which respond to inflation, the economy, and what markets expect the Fed to do. **Should I lock my rate now?** It depends on your closing date and how much risk you can tolerate. If you are under contract and the payment works, locking removes the uncertainty. Talk to your lender about your specific situation. ## The Bottom Line The Fed held rates, but two members wanted to hike, inflation is still running well above the 2 percent goal, and markets see a December hike as very likely. That does not point to a smooth slide in mortgage rates. If a payment works for you today, it is worth getting your numbers in front of you and deciding, not guessing what comes next. --- Nate Moghadam | NMLS #906770 | Fairway Independent Mortgage Corporation | Company NMLS #2289 | Equal Housing Lender. This is general market commentary, not a rate quote or a commitment to lend. Rates, terms, and programs are subject to change without notice. All loans subject to credit and property approval. [Legal Disclosures](https://www.fairway.com/legal/legal-disclosures) Topics: [market update](https://nateloans.com/blog/tag/market-update) [Mortgage Rates](https://nateloans.com/blog/tag/mortgage-rates) [2026](https://nateloans.com/blog/tag/2026) [Federal Reserve](https://nateloans.com/blog/tag/federal-reserve) [PCE Inflation](https://nateloans.com/blog/tag/pce-inflation) Share this post: Copy Link ![Nate Moghadam](https://45730973.fs1.hubspotusercontent-na1.net/hubfs/45730973/raw_assets/public/nateloans/images/nate-headshot.jpeg) **Nate Moghadam** Mortgage Loan Officer · Fairway Independent Mortgage · NMLS #906770 10+ years helping buyers, homeowners, and real estate agents navigate the mortgage process across 14 states. ### Talk to Nate Have questions about your specific situation? Book a free 15-minute call. [Book a Free Call](https://calendly.com/natemoghadam/homebuyer-consultation) ### Ready to Apply? Start your pre-approval online in minutes. Fast, easy, no obligation. 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