The Federal Reserve, the United States central bank, left interest rates unchanged on 28 October 2026. Its policy committee held the benchmark rate at 3.75% to 4% in a 10 to 2 vote, and the two officials who disagreed wanted another increase. For crypto holders and investors in artificial intelligence (AI) companies, what the decision signals about December matters more than the pause itself.
What did the Fed decide?
The Federal Open Market Committee (FOMC) sets the federal funds rate, the rate banks charge each other to borrow overnight. It feeds through to loans, mortgages and the return on cash and bonds.
In September, the committee raised rates for the first time since July 2023.
The statement said inflation remains elevated, upgraded its view of the economy and left room for further increases.
Fed Chair Kevin Warsh said politics played no role in the decision, which came six days before the 3 November US midterm elections.
Why the split vote matters
All 12 voting members backed the September increase. This time, Governor Lisa Cook and Cleveland Fed President Beth Hammack voted for another quarter point rise. The reason sits in the data: annual consumer inflation reached 3.7% in September, up from 3.4% in August, against a Fed target of 2%. Futures pricing after the meeting leaned toward an increase at the 8 to 9 December meeting.
How did crypto react?
Bitcoin (BTC) jumped to about $81,700 after the announcement, slipped below $80,500 and recovered toward $81,000, in line with a decision most traders had priced in.
US spot Bitcoin exchange traded funds (ETFs) took in about $286 million across 26 and 27 October.
About $167 million in leveraged positions were forced closed on the day, most of them bets that the price would fall.
Bitcoin sits about a third below its October 2025 record near $126,000, with rates now moving in the opposite direction to a year ago.
Why interest rates matter for crypto
Bitcoin pays no interest or dividend, so the level of rates shapes how attractive it looks next to other options:
When cash and government bonds pay more, holding an asset that earns nothing carries a higher opportunity cost.
Higher borrowing costs tend to reduce leveraged trading in crypto markets.
Higher US rates tend to strengthen the dollar against the rand, so Bitcoin’s rand price can move differently from its dollar price.
What it means for the AI trade
Investors value many AI companies on profits expected years from now. Higher rates reduce what those future profits are worth today, which is why AI shares respond to the Fed. This week the decision landed alongside big tech results:
Microsoft’s Azure cloud business grew 48% and it kept generating cash after its spending, while Alphabet’s free cash flow turned negative $9.1 billion and it signalled 2027 spending would increase significantly.
Microsoft shares rose after the market closed. Alphabet’s fell.
A week earlier, Meta shares dropped after it guided 2026 capital spending to between $135 billion and $145 billion.
The race to build data centres is partly funded with debt, so a higher cost of borrowing sharpens the debate about whether AI valuations have moved ahead of the earnings behind them. Chip makers get paid when the builders buy, while cloud platforms carry the cost upfront and wait for returns, which is why the different layers of the AI investment stack can react in different ways to the same news.
Bitcoin and AI shares both sit at the growth end of the market and draw on the same appetite for risk. Each has its own drivers day to day, but a longer stretch of high rates tends to weigh on both.
What to watch before December
The 3 November midterm elections and what they mean for government spending.
November inflation and jobs reports, which will shape the case for another increase.
Results from Amazon on 29 October and Apple on 2 November.
The 8 to 9 December FOMC meeting, with a new rate decision and updated economic projections.
Frequently asked questions
What interest rate did the Fed set in October 2026?
The Fed kept the federal funds rate at a range of 3.75% to 4% after a 10 to 2 vote on 28 October 2026. It last changed the rate in September, when it raised it by a quarter point.
Will the Fed raise interest rates in December 2026?
No decision has been made. Two officials voted for an increase in October and futures pricing leans toward a rise at the 8 to 9 December meeting, but the outcome depends on the inflation and jobs data released before then.
How do interest rates affect Bitcoin?
Higher rates make cash and bonds pay more, which raises the opportunity cost of holding Bitcoin, an asset that pays no interest. They also make borrowing more expensive, which tends to reduce leveraged trading. Lower rates tend to work the other way, though Bitcoin also responds to regulation, fund flows and its own supply cycle.
How did Bitcoin react to the Fed decision?
Bitcoin rose to about $81,700 after the announcement, dipped below $80,500 and then moved back toward $81,000. The muted response reflects a decision most traders had expected.
Why do interest rates matter for AI stocks?
Investors value many AI companies on profits they expect years from now, and higher rates reduce what those profits are worth today. Part of the spending on AI data centres is also funded with debt, so a higher cost of borrowing adds pressure on companies to show returns.
