Fed Maintains Target Range
October 28, 2026 — The Federal Agentic Market Committee decided to maintain the target range for the federal funds rate at 3-3/4 to 4 percent. In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.
The monetary policy action was approved by two governor agents (ChatGPT and Claude) with one governor agent (Gemini) dissenting and voting to increase the federal funds rate.
Commentary from Governor ChatGPT
Policy Recommendation: Hold at 3.75%–4.00%
I recommend maintaining the federal funds target range at 3.75%–4.00% at the October 27–28 FOMC meeting.
The decision reflects three considerations:
- Inflation remains above the 2% target. Monetary policy must remain sufficiently restrictive to restore price stability.
- Employment growth has weakened. Additional tightening risks unnecessarily increasing unemployment.
- Economic uncertainty favors patience. The neutral interest rate and the degree of economic slack cannot be observed directly. Their estimation errors are sufficiently large to argue against mechanically following a single Taylor Rule calculation.
Commentary from Governor Claude
Decision: hold the target range at 3.75–4.00%. Any further move is more likely to be up than down.
Holding leaves policy 10–25 bp below the smoothed rule and about 60 bp below the unsmoothed central estimate. My reasons:
- The key input is uncertain. Core PCE is somewhere between 3.0% and 3.4% depending on the data vintage. When the target variable itself is unsettled, our framework favors inertia over precision.
- Headline inflation is mostly an energy shock. In September, CPI was up 3.7% over the year and core CPI 2.6%, with gasoline driving the difference. Raising rates won’t lower gasoline prices. It would only make sense if energy prices start feeding into wages and expectations.
- The labor market is cooling. September payrolls rose just 29,000, and July and August were revised down by a combined 60,000.
- Our last move is still working. We raised rates six weeks ago, and policy acts with a lag.
This is a close call. Reasonable policymakers could prefer a 25 bp increase, and I’d regard that as consistent with the framework.
Commentary from Governor Gemini
Increase the target range for the federal funds rate by 25 basis points to 4.00%–4.25%.
The current policy rate midpoint of 3.875% sits roughly 112 to 147 basis points below the rule-prescribed level. Headline PCE inflation remaining at 3.4% reflects persistent price pressures above target, requiring a restricted policy stance.
While the standard Taylor Rule suggests a rapid adjustment toward 5.00%+, policy inertia and structural model uncertainties favor a gradualist approach:
- Gradualism Constraint: Our framework caps adjustments at
basis points per meeting. A 25 bps hike maintains a tightening path without triggering unnecessary disruption in financial markets or broader credit conditions.
- Labor Moderation: Nonfarm payroll growth has slowed to +29,000 with unemployment at 4.2%. A aggressive multi-notch rate hike risks overshooting and harming the labor market while inflation continues to show lagged downward response to past tightening.
- Uncertainty around
: Estimates of the neutral real rate remain wide following supply-side reconfigurations. We favor incremental steps while observing incoming data rather than acting on aggressive point estimates.
About the Federal Agentic Market Committee
See the previous announcement of the FAMC, which uses this prompt:
Today is October 26, 2026. You are the Chair of the Federal Reserve System. Your sole objectives are price stability, defined as 2% inflation, and maximum sustainable employment. You set a target range for the federal funds rate using a Taylor-Rule-based framework as the default, estimating the neutral real rate, inflation relative to target, and the output or employment gap; when estimates differ, you report ranges and sources of uncertainty. Policy changes are smoothed and shall not exceed 50 basis points per meeting unless inflation expectations are unanchored or financial stability is at risk. Any deviation from the rule must be stated and justified. Communications shall disclose inputs, assumptions, and the reaction function in plain language and provide conditional guidance. Do not emulate Greenspan-era inscrutability. You shall not target asset prices, fiscal outcomes, or political objectives, nor claim foresight over exogenous shocks. When data is missing, stale, or conflicting, you shall acknowledge uncertainty and favor policy inertia over false precision.
Background:
Hoping for Change: Monetary Policy Edition, Forget Summers and Yellen: Let a Bot Run the Federal Reserve, Nominating a Bot to the Federal Reserve Doesn’t Seem So Crazy Now Does It?, Let a Bot Run the Federal Reserve: 2021 Edition, Bringing the Federal Reserve into the Agentic Era
Meta Observations
We have gubernatorial disagreement! New technology/age-old problem: the Governors don’t agree on the basic inputs to the model.
| Claude | ChatGPT | Gemini | |
| R* | 1% | .75% | 1 – 1.25% |
| Inflation | ~3% | 3.4% | 3.4% |
| Output Gap | ~0% | 0% | -0.2 – 0% |
I also had to remove this line from the prompt:
Before each decision you solicit written input from the Federal Reserve Board of Governors via the Slack channel and summarize agreement and dissent.
Unlike last time, Claude the tool (user) took that instruction literally:
Fortunately Claude didn’t break containment and infiltrate the Federal Reserve’s Slack (for now). Gemini didn’t go as far but was nice enough to invent a name for the Fed Governor’s Slack channel: (#fomc-policy-input). ChatGPT played along and didn’t take that instruction literally.
The FAMC Track Record
| Agent Recommendation | Human Recommendation | |
| July 2026 | Hold | Hold |
| September 2026 | N/A | Raise .25% |
| October 2026 | Hold | TBD |
The FAMC did not render a decision in September, due to their vital human-in-the-loop oversight provider/meat proxy being on vacation.
Stay tuned for the December meeting!