Fed Interest Rates on Hold, but Two Votes Point to December

On Oct 28, 2026, the headlines said the Fed left interest rates alone. I read the vote first. The decision passed 10 to 2, and the two who voted no did not want lower rates. They wanted a hike. So I read this pause as a warning that rates may go up next.

That matters even if you have never owned a US stock. A Fed decision moves the dollar, and the dollar moves loan rates, savings rates and the price of almost everything bought from abroad. The usual rule says the countries whose rates sit furthest below the US feel it most. This year that rule did not explain much.

What did the Fed decide?

The Fed kept its key rate in a range of 3.75% to 4.00%. It raised the rate in September and paused this time, with inflation still high.

Voted to hold 10Voted to raise rates 2

Chart: how the twelve voters split at the October decision. Source: Federal Reserve statement.

The two dissenters wanted to raise it by another quarter of a percentage point. At the press conference, the chair, Kevin Warsh, said inflation is too high and that energy prices have moved up again in recent weeks. He added that borrowing has become harder for some businesses and households, but not hard enough for him to call it tight. In other words, he does not think the earlier hikes have done all their work yet.

How does a US rate decision affect your money?

Mostly through three things: your loan, your savings and the exchange rate.

If you borrow at a variable rate in the US, your payments follow the Fed closely. In many other countries they follow only if your own central bank moves too. Deposit rates for savers usually move the same way. And if you hold dollars or US funds, the exchange rate decides what they are worth in your own money.

That last part is where this year surprised me. The Fed raised rates, and the dollar did gain on the euro. But against the yen it barely moved, and against the Korean won it lost ground.

Chart: value of each currency against the US dollar, change since January 2, 2026. Source: Yahoo Finance exchange rates, MKViz calculation.

For someone in the euro area, the weaker euro means dollar savings are worth more at home, while anything priced in dollars costs more. In Japan, little changed either way. In Korea it went the other way: dollar savings lost value at home, even while the Fed was raising rates.

My own case: a fixed loan and dollars bought in steps

I live in Korea and hold US index funds. My home loan has a fixed rate for its whole term, so a Fed hike does not change my payments, and savings rates make little difference to me. The exchange rate is what matters, and this year it did the opposite of what I expected. A dollar cost 1,554 won in June and only about 1,322 won in October.

In June, with the won near its weakest and rate headlines everywhere, I almost changed a large sum into dollars in one go. I split it instead: once in June, then twice more as the rate came down. The first part cost me, because I bought dollars near the top. The later parts were much cheaper.

What I took from it applies to any currency. If you need dollars for a trip, tuition or investing, rate news will not tell you where the exchange rate goes next. If you change a set amount in steps, one bad day affects only part of what you buy.

Why does the same decision affect Japan, Korea and Brazil differently?

Here is how I read it, using three countries I follow closely. Start with the gap between the US rate and each country’s own rate. Money usually moves toward whichever currency pays more, so a bigger gap tends to mean a weaker local currency against the dollar.

Central bank	Policy rate
US Federal Reserve	3.75% to 4.00%
Bank of Korea	3.00%
Bank of Japan	1.25%
Central Bank of Brazil	13.75%

Source: Federal Reserve, Bank of Korea, Bank of Japan and Central Bank of Brazil decisions as reported; table by MKViz.

By that gap, Japan should feel the Fed the most, and it does, in a quiet way. Its rate is far below the US rate, and the yen has not recovered at all this year: it still sits near 158 per dollar, so imports stay expensive for Japanese households. Korea’s gap is small. Brazil’s runs the other way: its own rate is far above the US rate.

With small or reversed gaps, you would expect the won and the Brazilian real to hold up better than the yen. They did, but not mainly because of the gap. The real rose about 10% against the dollar this year. In my reading, Korea had lots of dollars coming in from exports, and in Brazil the presidential election moved the currency.

So the rate gap shows where the Fed weighs most, in Japan. Your own country’s news can move your currency just as much.

Will the Fed raise rates in December?

I lean toward a hike at the next decision on Dec 9, 2026, but I am less sure than I was at first.

3.7%US consumer prices in September, from a year earlier

0.6%Rise in that month alone

20.4%Energy prices, from a year earlier

Chart: US consumer price figures for September 2026. Source: Trading Economics, from US consumer price data.

Prices rose 3.7% in a year and 0.6% in September alone, with energy leading. Both dissents asked for a hike, and the chair called inflation too high.

What holds me back is that the Fed sets its goal with a different gauge, the PCE price index, not these consumer prices. Markets already put the odds of a December hike above half, but I would rather wait for two numbers that come out before the meeting: October consumer prices and the early-December jobs report.

If you have a variable-rate loan or savings in another currency, those are the two dates to watch too. If both keep pointing up, I expect a hike: borrowing in dollars gets dearer, and the yen stays under pressure.

Reader poll

Will the Fed raise rates on December 9?

Resolves: Fed decision on December 9, 2026 · Reader opinions, not investment advice.

Sources

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