Fed Holds Rates at 3.75%-4% in Hawkish Pause as Two Officials Push for Immediate Hike

The Federal Reserve voted 10-2 on October 28 to keep its benchmark interest rate unchanged in the 3.75%-4% range, pausing after September's quarter-point increase and citing still-elevated inflation alongside an economy it now describes as expanding at a "strong" pace. The hold was widely expected, but the statement carried a hawkish tilt: the Fed dropped language suggesting its previous hike would bring inflation down faster and replaced it with a pledge to gather more information before determining the appropriate policy stance.

The two dissents marked the sharpest internal division of the current tightening cycle. Governor Lisa Cook voted for a 25-basis-point increase, her first vote against an interest-rate decision since joining the Fed in 2022, joining Cleveland Fed President Beth Hammack, a consistent advocate of tighter policy. Cook's dissent was notable given that President Trump is reportedly making a second attempt to remove her from the board. Instant market reactions pointed in a hawkish direction: two-year Treasury yields rose roughly 4 basis points to 4.774%, the U.S. dollar index extended losses briefly before stabilizing, stocks pared gains with the S&P 500 last up 0.14%, and short-term interest-rate futures rose. Traders maintained a roughly 90% probability of a December rate hike.

Bitcoin climbed back toward $81,000 after the decision, having faced meaningful selling pressure through the session. A Glassnode analysis noted that long-term holders own approximately 4 million BTC purchased between $85,000 and $118,000, meaning more than half of those coins sit underwater at current prices, with a recovery toward $85,000 potentially triggering break-even selling. Against that backdrop, U.S. spot Bitcoin ETFs recorded $175.99 million in net inflows on October 27, their second consecutive positive session, bringing the two-day total to roughly $286 million and narrowing October's net outflows to about $26 million. BlackRock's IBIT and Fidelity's FBTC led the rebound, with total ETF assets reaching $103.94 billion.

In a separate corporate development, Strive acquired 6,182 Bitcoin for approximately $511 million, lifting its holdings to 43,000 BTC and launching a new $1 billion capital program. Bitwise simultaneously raised its long-term Bitcoin price target to $1.6 million by 2036, projecting 34.3% compound annual returns driven by institutional demand, fixed supply, and currency debasement concerns. The firm's bear case stands at $130,686 and its bull case at $3.67 million, with its model assuming a global store-of-value market reaching $110 trillion.

On the same day, the Bank of Canada raised its key rate by 25 basis points to 2.5%, its first hike since 2023, with Governor Tiff Macklem saying the policy rate even after the increase is low enough that it is not yet restraining growth, and deputy governor Rogers signaling the governing council sees the balance of inflation risks as having shifted.