Fed Holds Rates at 3.75%-4%; Two Dissent for a Hike

The Federal Reserve held its benchmark rate at 3.75% to 4% on October 28, but two officials voted for another hike.

For an ecommerce entrepreneur, that vote matters because the money funding your store reprices off it. Business cards, variable credit lines and many SBA loans move with prime, which sits at 7% after September’s quarter-point hike, per Bankrate. Yahoo Finance reported that CME FedWatch priced about an 84% chance of another hike at the December 8-9 meeting, and that lands on anyone carrying balances to pay for Google and Meta ads, supplier orders or Q4 inventory.

I track these decisions at Ecommerce Paradise because a high-ticket store lives on float, the weeks between paying for ads and inventory and getting paid. Below you get what the Fed said, how we got here, what a quarter-point does to a real store’s math, and five moves to make before December. I set up this vote in last week’s hike-odds preview.

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Fed Holds at 3.75%-4% as Cook and Hammack Dissent

The Federal Open Market Committee kept its target range at 3-3/4 to 4 percent on October 28, 2026, according to the Federal Reserve’s statement. The vote was 10 to 2. Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented, and both preferred raising the range by a quarter point at this meeting.

September’s vote was 12 to 0, per Yahoo Finance’s live coverage, when the Fed raised rates a quarter point for the first time in more than three years. The committee went from unanimous to split in six weeks.

The statement describes economic activity as “expanding at a strong pace” and says inflation “remains elevated.” It adds that “The Committee will deliver price stability,” and that the Fed will gather more information to decide the policy stance needed to bring inflation back to 2 percent. Job gains have kept pace with labor force growth, and the unemployment rate has changed little, according to the statement.

Markets read the hold as a pause. At 1:27 p.m. ET, CME FedWatch showed about an 84% chance of a hike at the December 8-9 meeting, and the Fed’s dot plot projects a second hike in 2026, Yahoo Finance reported. The same report says Kevin Warsh has avoided signaling future policy moves. Yahoo also notes that CD rates would likely rise after a hike, though banks may have priced in expected increases already.

Here is where borrowing costs stand. Bankrate’s rate tracker put the average credit card APR at 19.70% as of October 21 and the prime rate at 7%. That card average is down from a record 20.79% set on August 14, 2024, so cards have not yet re-hit their peak despite September’s hike.

Inflation is what keeps the hawks talking. September CPI, released October 14, rose 0.6% on the month and 3.7% from a year earlier, according to First Trust’s CPI breakdown. Core CPI rose 0.3% against a 0.2% consensus and is up 2.6% year over year. Energy jumped 5.2% in the month and is up 20.4% from a year ago, and gasoline’s 9.1% rise accounted for more than half of the headline increase. Real hourly earnings fell 0.5% in September and are down 0.7% over the past year.

September’s Hike and 3.7% CPI Set Up the Split Vote

The September 16 hike lifted prime from 6.75% to 7.00%, effective September 17, which I laid out in my piece on the 10-year Treasury yield hitting a 24-year high. That yield touched about 5.35% on October 7, its highest since 2002, and it works on mortgages and long-term fixed rates more than on your variable business lines.

Consumers felt it quickly. I covered confidence falling to 81.9 as the Fed hiked. Weeks later came a rebound to 91.7 while big-ticket buying plans kept falling. That split between mood and intent matters, because better sentiment without better durable-goods intent is the worst mix for anyone selling furniture, outdoor gear, mobility or powersports equipment online.

First Trust’s CPI note says headline and core inflation have now run above the Fed’s 2.0% target for 66 straight months. It did not expect a hike at this meeting but sees one as likely in December, which matches today’s hold. My September CPI write-up has the full print.

The timing adds pressure. Yahoo Finance headlined the decision as a split vote ahead of the midterm elections, and the next meeting lands right after them. I will not guess at politics here. What matters for a store owner is that the Fed gets more inflation and jobs data before December 8-9, and each release can move the odds in either direction.

Now the counterpoint, because there is one. Energy did most of the damage in the headline number, and core at 2.6% sits closer to target than the 3.7% headline. A hike does nothing to the price of gasoline. Against that, core beat expectations, real wages are shrinking, and two voting members wanted to tighten now. The Fed’s statement lists the dissent but not the reasoning, so I am not putting words in Cook’s or Hammack’s mouths.

Rate Hikes Reprice Ad Float, Card Balances and Buyer Financing

Everything in this section is my read, not reporting. I am not a financial advisor, and nothing here is personalized advice.

My read: a quarter-point is a rounding error. The base is the problem. Take a hypothetical store that carries a $50,000 card balance at the 19.70% average APR. That costs about $9,850 a year, or roughly $821 a month, before any hike. A December quarter-point adds about $125 a year to that same balance. If that balance is funding ads, the hike is not what hurts you, the 19.70% is.

Per-order math shows the same thing. Say a $3,000 order at a 25% gross margin leaves $750, which sits inside the 20-30% gross margin range I teach for high-ticket stores. If you front the $2,250 supplier cost on a card for 14 days at 19.70%, the float costs about $17, or 2.3% of that margin (hypothetical numbers, my arithmetic). A hike moves that by pennies. What eats the margin is when the float stretches from 14 days to 45 because of a backorder or a slow payout.

That is why I keep telling store owners to know their cash cycle before they know their rate. A bookkeeping tool such as Finaloop shows interest expense and cash timing without a spreadsheet. If you already live in the Intuit world, QuickBooks can tag card interest as its own line.

The bigger risk is demand, and this is where high-ticket sellers differ from the rest. Your buyers finance. In the ICSC survey I covered, 49% of holiday shoppers expect to borrow, which is stated intent, not completed purchases. Meanwhile Affirm fell 10% as yields jumped, a reminder that buy-now-pay-later lenders feel funding costs too.

Competitors are answering with promotions like Wayfair’s 0% APR for six months through Klarna, and a small store cannot match that on its own balance sheet. What you can do is make sure your financing option is easy to find on the product page and in the cart, because a buyer comparing a $3,000 purchase across two stores is likelier to stay where the monthly payment is visible (my read, not a measured result). Merchant fees on those plans are real money, so price them into the product margin instead of discovering them at payout.

Supplier terms are the lever most dropshippers ignore. If an authorized dealer agreement gives you net-30 or net-45 terms, you can often pay the supplier after the customer has already paid you, which takes the card out of the picture for that order. Every week you can push payment past the day your buyer’s card clears is a week of float you no longer pay 19.70% on. Ask for it when you onboard a new supplier, and ask again once you have a few months of order history.

Scenarios, with thresholds. If the Fed hikes December 9, prime goes to 7.25% and every prime-linked balance reprices within a billing cycle or two. If the next CPI print shows core at 0.3% or higher again, I would treat December as done and plan for it. If core comes in at 0.2% or lower and energy eases, the hold becomes live and the 84% number looks too high. Either way, I would budget Q4 as if borrowing stays expensive through spring, and I would be pleasantly surprised if it does not.

One more angle for operators who want growth capital. Lenders are moving into this gap, and I covered Stripe’s purchase of small-business lender Parafin. Embedded loans are convenient and priced accordingly, so compare them against a plain line before you sign.

If you are still learning why this model lives and dies on float, start with my guide to what high-ticket dropshipping is. And if you would rather not run ad-spend math, supplier terms and financing offers yourself, my team builds and runs high-ticket stores through the turnkey done-for-you service, so the cash-cycle decisions sit with people who make them every week.

The Fed may hike again December 9, so make sure the cards funding your ads actually pay you back. See my business credit card picks →

Five Moves to Make Before the Dec. 8-9 Fed Meeting

Here are five moves, in the order I would do them.

List every balance that floats with prime. Pull your cards, lines and any SBA loan, write down the rate and the balance, and multiply each by 0.25%. That is the dollar cost of December. It takes ten minutes.
Pay down the highest-APR balance first. At 19.70% on average, cards cost more than almost any line of credit. If you need a cheaper line, check your profile with Nav before you apply, so the first thing a lender sees is not a surprise.
Ask for the credit you need before December 9. If Q4 inventory needs a higher limit, request it now while prime is still 7%. Card issuers are also tightening fees, as in the Citi AAdvantage Business card fee rising to $150, so re-check what each card costs you in total. If you still run as a sole proprietor, see how to form your business first.
Put idle cash to work. If you hold more than a month of expenses in checking, a money market fund at Schwab is one place to look, since Yahoo notes CD rates would likely rise after a hike. A business account like Mercury works too, and my Mercury walkthrough covers the application.
Re-run your ad break-even at Q4 prices. Meta’s ad prices rose 23% in the US and Canada before Q4, so a financed ad dollar is now doing more work than it was in the summer. Set a ROAS floor, then use Klaviyo flows to recover abandoned high-ticket carts, since email revenue does not carry an auction price.

If you want a second set of eyes on your numbers, Explore Turnkey Builds and we will go through them together. Still choosing a category? Grab the free niches list.

Frequently Asked Questions

What did the Fed decide on October 28, 2026?
It held the target range at 3.75% to 4% by a 10 to 2 vote. Lisa Cook and Beth Hammack dissented in favor of a quarter-point hike, per the Fed’s statement.

Will the Fed hike in December?
Nobody knows yet. Yahoo Finance reported about an 84% market-implied chance at 1:27 p.m. ET on decision day, and the dot plot projects another 2026 hike. The next meeting is December 8-9, and the inflation data between now and then can change the odds.

What is the prime rate now?
Bankrate lists prime at 7%, with the average credit card APR at 19.70% as of October 21. A December hike would take prime to 7.25%, since it tracks the top of the Fed’s range.

Do Fed hikes raise my Shopify or ad costs directly?
No. Your Shopify plan and ad auctions do not reprice off the Fed. The effect runs through your financing and your buyers’ financing, which is why I watch both.

Should I pay down cards or hold cash?
I am not a financial advisor, so run your own numbers. As a reference point, a card at 19.70% costs more than most cash accounts pay, and my Chase 3/24 write-up shows why you want a clean entity before you apply for new credit.

How do higher rates hit high-ticket demand and a store sale?
Buyers who finance feel it first, and so do acquirers who borrow. If you plan to sell, read the SBA acquisition loan rules. Then check the 200-listing asking multiples study.

Want 1-on-1 coaching to stress-test your store’s margins against a higher-rate Q4? Get the coaching details →

Rates will keep moving and your costs move with them, so keep your cash cycle short and your numbers current. Subscribe to the YouTube channel for daily breakdowns. More breaking news coming through the day.

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Trevor Fenner

Trevor Fenner is an ecommerce entrepreneur and world traveler from Seattle, Washington, and the founder of Ecommerce Paradise, a platform focused on helping entrepreneurs build and scale profitable high-ticket ecommerce and dropshipping businesses. With over a decade of hands-on experience, Trevor specializes in high-ticket dropshipping strategy, niche and product selection, supplier recruiting and onboarding, Google & Bing Shopping ads, ecommerce SEO, and systems-driven automation and scaling. Through Ecommerce Paradise, he provides free education via in-depth guides like How to Start High-Ticket Dropshipping, advanced training through the High-Ticket Dropshipping Masterclass, and fully done-for-you turnkey ecommerce services for entrepreneurs who want a faster, more hands-off path to growth. Trevor is known for emphasizing sustainable, real-world ecommerce models over hype-driven tactics, helping store owners build scalable, sellable, and location-independent brands.

He maintains homes in Seattle and Bali, spends most of the year overseas, and usually returns to Seattle for about a month each summer.

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