Federal Reserve Policy
The Fed holds rates: why can deposits, loans and bonds still reprice?
Two voters preferred a rate increase in October. For a family with US-dollar deposits, floating-rate debt and bonds, the important distinction is when each asset or liability reprices.
An unchanged rate leaves a policy disagreement
On 28 October 2026, the Federal Reserve voted 10–2 to keep the federal funds target range at 3.75%–4.00%. Lisa D. Cook and Beth M. Hammack preferred a 0.25-percentage-point increase. The statement described strong economic expansion and still-elevated inflation, and said more information was needed to assess the appropriate policy stance.[1]
G70 analysis: this decision brings no immediate relief from a rate cut. The two dissenting votes also show disagreement at this meeting over further tightening. The statement does not set out each dissenter’s full reasoning or commit to an increase at the next meeting. It cannot establish a definite endpoint for interest rates.
Bank quotations and loan resets follow their own schedules
The implementation note kept the interest rate on reserve balances at 3.90%, effective 29 October. That is a rate the Fed pays on eligible institutions’ reserve balances, not a dollar time-deposit quotation available directly to a family.[2] A new or maturing deposit needs comparison against the bank’s current term, balance requirements and early-withdrawal conditions. An unchanged policy rate does not establish that the next deposit will earn the old rate.
A floating-rate loan starts with its contract. If interest is a specified reference rate plus a spread, changes to that rate, the spread or other agreed components take effect under the contractual observation period and reset date. The word “hold” in a policy announcement does not freeze the whole loan. G70 analysis: a fixed deposit may continue earning its original interest while the loan enters its next reset period, so the two cash flows can move apart.
A hypothetical dollar deposit and loan
This is a hypothetical illustration, not a current quotation or client case. A family has a US$2 million unmatured time deposit paying a fixed 3.60% a year. Its business separately owes US$3 million on a floating-rate loan, assumed to charge a 3.80% contractual reference rate plus a 1.50% spread: 5.30% in total. With unchanged principal for a full year and simple annualised calculations excluding taxes, fees and compounding, deposit interest is US$72,000, loan interest US$159,000 and net interest expense US$87,000.
If the reference rate rises by 0.25 percentage point at the next reset and the spread is unchanged, annualised loan interest increases by US$7,500. The unmatured fixed-rate deposit does not earn more as a result. This is not a rate forecast. It shows why different balances, terms and repricing dates prevent dollar assets and debt from automatically offsetting one another.
Bonds do not wait for a deposit to mature
A fixed-rate bond’s coupon can stay unchanged while its secondary-market price moves. If the market requires a higher yield, its fixed payments become relatively less attractive and its price generally falls; the reverse also applies.[3] Bond yields reflect expectations of future policy rates and compensation for holding longer maturities, rather than just the current overnight rate.[4] Corporate bonds also carry credit and liquidity risks, so their price changes cannot all be attributed to the Fed.
G70 analysis: if a family plans to sell bonds to meet a known payment, available cash should be estimated using executable sale prices; the stated coupon cannot substitute for sale proceeds. If the plan is to hold to maturity, the payment date must fit the maturity date, with issuer default, call provisions and other terms still considered. After this meeting, comparing the deposit renewal date, loan reset date and actual cash requirement is more informative than treating all three as “unchanged dollar rates”.
Official and primary sources
- Federal Reserve — FOMC statement, 28 October 2026
- Federal Reserve — Implementation Note, 28 October 2026
- SEC Investor.gov — Interest rate risk and fixed-rate bonds, 26 June 2013
- Reserve Bank of Australia — Bonds and the Yield Curve
Sources checked on 2 November 2026.
