Fed holds with two votes for a hike, Thailand stays at 1%

On Wednesday 28 October 2026, the central banks of Thailand and the United States held interest rates less than a day apart. The two decisions sound alike, but the two rooms were not equally quiet. In one, two members asked for a rise. In the other, everyone present agreed. That difference is what reaches the baht in your pocket.

In Bangkok, the Bank of Thailand's Monetary Policy Committee, known as the MPC, kept its policy rate at 1.00% a year. The policy rate is the starting rate a central bank uses to signal to the whole system, and commercial banks then build their loan and deposit rates on it. The decision was unanimous among the members present, as one member was absent.

At 1 a.m. on 29 October, Bangkok time, the US central bank, which markets call the Fed, said it would hold rates at 3.75 to 4%. But the vote was 10 to 2. The two dissenters were Lisa Cook, a Fed governor, and Beth Hammack, president of the Cleveland Fed. Both wanted a further 0.25% rise straight away.

The Fed raised rates in September, and some want another rise

The hold came less than six weeks after the Fed raised rates by 0.25% on 16 September. All 12 members voted for that rise, its first in more than three years. The cause is prices. US inflation, which measures how much more everyday goods cost than a year earlier, reached 3.7% in September 2026, against the Fed's 2% goal. Petrol prices in the US rose 34.2% over the same year.

Raising rates makes borrowing more expensive. When a mortgage, a car loan or a loan to grow a business costs more, people and companies spend less, and with fewer buyers chasing goods, prices rise more slowly. But the medicine works slowly and has side effects: raise too hard and businesses may slow their hiring. Ten members chose to wait for more data, and two did not want to wait. The Fed's statement said briefly that inflation remains elevated and that it will deliver stable prices.

What markets noticed is that Cook had never dissented before, as Kaohoon International pointed out, while Hammack is known for preferring higher rates to fight inflation. When two people in the room say rates should rise now, markets read it as a sign the next rise may come soon.

Markets put the chance of a December Fed rise above 70%

The tool markets use to track this is CME FedWatch, from CME Group, the Chicago futures exchange. It turns the prices of contracts linked to US interest rates into the chance that the Fed will move rates at each meeting, and by how much. It is not a Fed forecast. It is the combined view of people putting real money on what the Fed will do next.

The day after the meeting, FedWatch put the chance of a December rise at 78%. By 3 November it had eased to a little above 70%, according to figures cited by Tradingpedia. Put simply, if markets guessed 10 times, about 7 of those guesses would be a rise. The figure changes every day as new economic data comes out. The Fed holds its last meeting of the year on 8 to 9 December 2026, according to its calendar, and the result will come out early on the morning of 10 December, Bangkok time.

Thailand held at 1% because growth is still uneven

Thailand sees things differently because its problem is different. The MPC expects the economy to grow 2.4% in 2026, up from 2.3% in its previous forecast, and 2.1% in 2027. The main push comes from exports and investment tied to the technology and AI cycle. But the MPC said growth is still below potential, meaning slower than the Thai economy could grow if every engine were running fully, and the gains are concentrated in some industries and some groups of workers.

The other side of the picture is ordinary people. Household debt is still high, the job market is fragile and spending power is weak. Loans to SMEs are still shrinking in almost every sector, while total lending grows because of big companies. So the MPC judged that rates this low are still right, to support a recovery that has not reached everyone, even though it expects Thai inflation to rise for a while because of energy prices and El Niño, to an average of 2.1% for 2026, as Nation Thailand summarised.

The rate gap reaches the baht before it reaches loan payments

US policy rates are now 2.75 to 3 percentage points above Thailand's. If the Fed raises by another 0.25% in December and Thailand stays put, the gap widens to 3 to 3.25 points. Picture two savings accounts, one paying about four times as much as the other. Big investors around the world think the same way we do: they look for the higher return. So money is pulled towards the dollar, and when more people sell baht to buy dollars, the baht weakens.

The Bank of Thailand has already seen this. The MPC's statement of 28 October said the baht had weakened against the dollar because markets shifted towards expecting tighter US monetary policy, and rising oil prices from tension in the Middle East added to the pressure. That is a change from mid-September, when Surach Tanboon, a senior director in the Bank of Thailand's monetary policy department, said markets had already priced in the gap between Thai and US rates, and the baht was fairly steady at the time.

For borrowers and savers in Thailand, the news does not change loan payments or deposit rates straight away, because rates at Thai banks follow the MPC, not the Fed directly. The same statement said borrowing costs for the private sector have stayed in line with the policy rate. What moves first is the price of anything paid in dollars. If the baht weakens, fees for studying abroad, trips overseas, online services billed in dollars and the oil Thailand imports all cost more in baht.

The dates to note are 10 and 23 December

Two dates are worth noting for the rest of the year. Early on the morning of 10 December, Bangkok time, the Fed announces the result of its last meeting of the year, and on 23 December the MPC holds its sixth meeting of the year, according to the schedule on the Bank of Thailand's website. In the meantime, open your loan contract to see whether the rate is fixed or floating, and check whether any big bills in the next few months must be paid in dollars. Those two questions tell you how much the next rate decision matters to you.

FAQ

How are the Fed and the MPC different?

The Fed is the US central bank and sets the US policy rate. The MPC is the Bank of Thailand's Monetary Policy Committee and does the same job for Thailand. The two decide separately.

Why is a dissent at the Fed news?

The vote shows what the people in the room think. This time two members wanted to raise rates at once, so markets read it as a sign the Fed may raise in December, and Lisa Cook had never dissented before.

Will Thai loan rates rise with the Fed?

Not directly. Rates at Thai banks mainly follow the MPC, which held at 1% and meets again on 23 December 2026.

What is the CME FedWatch figure?

It is a probability worked out from the prices of futures contracts linked to US interest rates. It shows what markets expect the Fed to do, not the Fed's own forecast, and it changes every day.

Sources

• Federal Reserve: FOMC statement, 28 October 2026
• Federal Reserve: FOMC statement, 16 September 2026
• Federal Reserve: Meeting calendars
• Bank of Thailand: Monetary Policy Committee's Decision 5/2026 (Thai)
• Bank of Thailand: MPC meeting schedule
• Kaohoon International: Fed Opts to Hold Interest Rates as Markets Anticipate December Hike
• Nation Thailand: Bank of Thailand holds policy rate at 1.00% on October 28
• U.S. Bureau of Labor Statistics: Consumer Price Index
• Tradingpedia: Euro Under Pressure Near 1.1200 as USD Firm Before Vote
• Mitihoon: Bank of Thailand sees limited pressure on capital flows from the rate gap (Thai)