The Federal Reserve held its benchmark rate at 3.75% to 4% on 28 October 2026, in a 10-2 vote in which two officials wanted to raise it.
The Fed’s statement says Lisa D. Cook and Beth M. Hammack “preferred to raise the target range for the federal funds rate by 1/4 percentage point at this meeting.” It also says “Productivity growth is strong, and capital investment is robust,” in an economy where, by ING’s estimate, tech investment makes up a large share of growth.
Short explainer · Fed macro brief
A vertical news Short narrated from the published headlines and opening lines of this piece and four related FourWeekMBA pieces on AI and the economy.
Business Pill · Financial Conditions
An evergreen Business Engineer explainer on financial conditions: several prices of money pulling at once. It explains the general idea only and does not discuss this Fed meeting.
Update (28 Oct): what Warsh said about AI today. No transcript of the 28 October news conference was available at the time of writing; the lines below come from live posts and notes, attributed to each.
As relayed by the Wall St Engine and FirstSquawk accounts on X, Warsh said: “I was skeptical that interest rates would not have an effect on AI. Rates affect almost everything.” FirstSquawk’s headline adds that since early September, both inside and outside the technology complex, interest rates have had an effect; Wall St Engine’s post says he also noted that credit spreads have widened.
According to FXStreet’s live notes, he said third-quarter GDP is likely to be above 3%, business investment is likely rising at a double-digit pace, credit conditions have tightened, market participants are becoming more discerning in their capital allocations, and the Committee discussed geopolitics and technology.
He also announced a change to the FOMC meeting schedule. CNBC quotes him: “in 2027, one meeting will focus exclusively on broad monetary policy strategy, with neither a vote on the federal funds rate nor a policy statement anticipated.” FXStreet’s notes add that the Fed expects six policy-setting meetings in 2028.
Context: what Warsh said about AI at an earlier press conference. The livestream below, streamed on 28 October by moneycontrol, replays an earlier Warsh press conference, not this week’s. In it he calls the meeting his “second FOMC committee meeting as chairman,” and reporters ask about the June CPI print and Jackson Hole, so it appears to be the press conference after the 28–29 July 2026 meeting. These are his words from that recording, not from 28 October:
“In the AI-related category of high-tech equipment and software, the most recent data shows four-quarter growth rates of nearly twenty percent.”
“The business CapEx boom, for example, is driving up prices of memory and logic chips and associated AI infrastructure.”
And: “there’s a race between supply and demand, and the surge in business CapEx in around AI, it’s making that calculation a little harder to judge.”
Asked about outside task forces, including one co-chaired by Marc Andreessen, he said: “The judgments we’re making will be informed by, but not at all determined by these outside groups.” Quotes are from a transcript of the stream’s audio.
A replay, streamed on 28 October by moneycontrol, of an earlier Warsh press conference that appears to be from July 2026. It is not the 28 October news conference.
The key insight: As we read it, the Fed held rates while describing an economy with strong productivity growth and robust capital investment, and two of its voters wanted to raise rates instead.
FOMC vote on 28 October 2026: 10 members voted to hold the target range at 3.75%-4%; Lisa D. Cook and Beth M. Hammack preferred a quarter-point hike. Source: Federal Reserve FOMC statement, 28 Oct 2026.
The statement opens: “The Committee decided to maintain the target range for the federal funds rate at 3-3/4 to 4 percent, in support of the Federal Reserve’s dual mandate.” The Committee “approved the following statement for release by a 10 – 2 vote.”
September vs October. In September the Fed raised the range by a quarter point to 3.75%-4% in a 12-0 vote, its statement of 16 September shows. This time it held.
Growth wording. September said activity was “expanding at a solid pace.” October says “Economic activity is expanding at a strong pace.”
Inflation. Both statements say “Inflation remains elevated.” October adds: “The accumulation of more information will help the Committee determine the policy stance appropriate to ensure a timely return of inflation to the Committee’s 2 percent goal.”
ING estimates of tech investment’s share of US real GDP growth (year on year, Q2 2026) on three measures: 50.2% (broadest), 44% (core) and 36% (core less net tech imports, ING’s preferred). ‘Rest of growth’ is 100 minus ING’s share (our arithmetic). Source: ING Think, Aug 2026.
What Was Posted on X
Fed Chair Kevin Warsh holds rates steady in a 10-2 vote.
Lisa Cook and Beth Hammack dissented, favoring a 25-bp hike.
The Fed says the โaccumulation of more informationโ will help determine policy.
Kalshi traders see 75% odds of another hike this year, likely in December.
Wall St Engine posted that Fed Chair Kevin Warsh held rates steady in a 10-2 vote, that Lisa Cook and Beth Hammack dissented in favour of a 25-basis-point hike, that the Fed says the accumulation of more information will help determine policy, and that Kalshi traders see 75% odds of another hike this year, likely in December.
Fed Chair Warsh on AI and interest rates:
“I was skeptical that interest rates would not have an effect on AI. Rates affect almost everything.”
“We’re seeing interest rates have an effect on the technology complex.”
Wall St Engine posted Fed Chair Warsh’s remarks on AI and interest rates: “I was skeptical that interest rates would not have an effect on AI. Rates affect almost everything.” and “We’re seeing interest rates have an effect on the technology complex.” The post says he also noted that credit spreads have widened.
What Warsh Said at the Briefing
Fed Chair Kevin Warsh began his news conference at 18:31 UTC. Headlines from the briefing posted by the Walter Bloomberg news account on X reported that he said third-quarter GDP growth was likely above 3% and that business investment was likely rising at a double-digit pace. The same account reported him saying the Fed’s responsibility is to get inflation down. These are headline summaries, not full quotations; a transcript was not available at the time of writing.
Why It Matters for AI Spending
ING estimates that tech investment accounted for 36% to 50% of US growth in the second quarter, depending on the measure, as we reported today. CNBC reported the 10-year Treasury yield at 5.02% early in the afternoon, and Bloomberg has reported strain in the debt markets funding AI infrastructure, as we reported.
CNBC also reported that Goldman Sachs sees inflation easing next year as pressures from tariffs, “the AI buildout and energy abate.” Ramp’s AI token price index has fallen about 35% since the end of June, as we reported today.
The Structural Read
The statement changed one growth word: from “expanding at a solid pace” in September to “Economic activity is expanding at a strong pace” now.
The two dissents ran toward tighter policy: Cook and Hammack “preferred to raise the target range for the federal funds rate by 1/4 percentage point at this meeting.”
The statement does not mention artificial intelligence; the link to the AI build-out is ING’s estimate that tech investment is a large share of US growth, as we reported today.
FOMC statement, 28 October 2026
“Productivity growth is strong, and capital investment is robust.”
Three Implications
FOR BORROWERS The Fed held the range at 3.75%-4%, and CNBC reported the 10-year Treasury yield at 5.02% early in the afternoon.
FOR THE AI BUILD-OUT The statement calls capital investment robust, and headline posts from the briefing reported Warsh saying business investment was likely rising at a double-digit pace.
FOR THE NEXT MEETING The statement says more information will help the Committee determine the appropriate policy stance; it gives no forecast.
The framework describes the AI supercycle this way: “It describes the intersection of three powerful forces: geopolitics, cultural transformation, and economic change.”
As we read it, today’s decision is the macro side of that loop: the price of money that the AI build-out is financed at. The framework was published in June 2026 and does not discuss this meeting.
What Is Not Established
The Fed did not say whether it will raise rates in December, and the statement gives no forecast. Warsh’s remarks above come from headline summaries posted during the briefing, not a transcript. The Fed’s statement does not mention artificial intelligence.
This Week In The AI Supercycle
Execution Fault Lines, Concentrated Demand, and Geopolitical Firewalls
This week’s issue: the AI build is not short of demand for its parts. It is short of cheap money, and its end revenue rests on a narrow base of large, often venture-funded buyers.
The Fed held at 3.75% to 4% with two officials voting for a hike, said economic activity is expanding at a strong pace, and described productivity growth as strong and capital investment as robust. It did not cut rates, and two of its twelve voters wanted to raise them.
A note on sourcing. The decision, vote and statement wording come from the Federal Reserve’s statements of 28 October and 16 September 2026. Warsh’s remarks come from headline summaries posted during the briefing, not a transcript. Market and Goldman Sachs figures are as reported by CNBC. We did not contact the Federal Reserve.
Correction (28 Oct): an earlier version described the embedded livestream as Warsh’s 28 October news conference. It replays an earlier press conference, which appears to be July’s; the embed is now labelled accordingly.
Gennaro Cuofano is a CRO and tech executive who has worked in AI since late 2015, starting with bringing NLP, natural-language generation, voice and chatbot products to the marketing industry. His background is in law and finance: he holds a Master's degree in Law and an International MBA with an emphasis on corporate finance (LUISS Business School and the University of San Diego, 2012), and worked as a financial analyst at a real-estate investment firm in San Diego and as an assistant controller. His work focuses on business model strategy, business engineering and, more broadly, structural analysis: how companies make money, read from their own filings. He created FourWeekMBA and leads research there and at The Business Engineer, his newsletter on AI and business strategy, with over 95,000 subscribers and more than 1,000 published analyses. His writing has also appeared on Entrepreneur (for example, How to Digitize a Family Business in Europe) and HackerNoon. Find him on LinkedIn and Substack. See how we source.
