The Federal Open Market Committee voted 10-2 on October 28, 2026 to hold the federal funds rate at 3.75% to 4%, with Fed Governor Lisa Cook and Cleveland Fed President Beth Hammack both dissenting in favor of a 25 basis point hike (Federal Reserve press release, October 28, 2026). It was Cook’s first dissent since joining the Board in 2022, and it is the first time a sitting governor and a reserve bank president have dissented together on the hawkish side since October 1992, according to same-day reporting from CNBC and Fortune. The Committee’s statement kept inflation at “elevated” while upgrading its read on activity from “solid” to “strong.”
Who it affects. Self-insured employers, pools, and captives that discount long-tail liabilities to present value, and any program that set its 2027 WC medical and wage-driven indemnity severity trend on an assumed disinflation path.
The dissent is secondary to a calendar change. Prior coverage here tracked the drift toward hawkishness through three dissenters in August and a hold at the same range in July and September. What’s new is not that the committee has hawks; it’s that one is now a governor, not just a regional president, and Chair Kevin Warsh used the same meeting to confirm the Fed will cut its rate-setting meetings from eight a year to six starting in 2027, with one of the remaining meetings reserved purely for strategy and no rate vote (CNBC). That is a structural reduction in how often the Committee produces a fresh, votable read on the rate path, the input most reserve actuaries use to update a discount curve between annual studies. A self-insured that leaned on eight scheduled meetings a year as informal checkpoints for its discount-rate assumption will have six in 2027, and effectively five once the strategy-only meeting is excluded.
Reserve mechanism. Two levers move in opposite directions. A higher-for-longer rate path raises the discount rate applied to long-tail reserves, which increases the present-value credit a captive or self-insured books against undiscounted liabilities; on a level 15-year payout, moving the curve 50 basis points shifts the discounted reserve roughly 3.6%, as this feed noted after the September FOMC decision. But the Committee’s continued “elevated” inflation language argues against softening the nominal severity trend selected for 2027 WC medical and wage-driven indemnity. Picking a favorable discount rate while also picking a soft severity trend double-counts an inflation assumption that the Fed itself is not yet willing to call transitory.
What this means for your next review. Don’t wait for the next scheduled FOMC meeting to revisit the discount curve; with only five votable meetings left for 2027, build an interim checkpoint into your own monitoring calendar rather than relying on the Fed’s. Ask your actuary to show the sensitivity of your held reserve to a 50 to 75 basis point upward shift in the discount curve, and confirm the 2027 severity trend selection isn’t implicitly assuming a disinflation path the discount-rate assumption already prices against.
See the prior entries in this series: Fed’s July Meeting Tests Long-Tail Reserve Discount Rates, What Three Fed Dissenters Mean for Long-Tail Reserve Discounting, and The September FOMC Decision Sets Your Tail Reserve Discount Rate. For how captives construct the discount itself, see Discounting Captive Reserves: Statutory, Tax, GAAP, and IFRS Compared.
Sources
- Federal Reserve, FOMC statement and press release, October 28, 2026: https://www.federalreserve.gov/newsevents/pressreleases.htm
- CNBC, “Fed interest rate decision October 2026,” October 28, 2026: https://www.cnbc.com/2026/10/28/fed-interest-rate-decision-october-2026.html
- CNBC, “Fed meeting today: live updates,” October 28, 2026: https://www.cnbc.com/2026/10/28/fed-meeting-today-live-updates.html
- Fortune, “Fed rates steady as Cook and Hammack dissent,” October 28, 2026: https://fortune.com/2026/10/28/fed-rates-steady-midterms-october-3-75-to-4-percent-cook-hammack-dissent/