Fed Opens October Meeting With a Hold Expected

The Federal Reserve opens its two-day meeting on Tuesday, October 27, and almost nobody expects it to move. The decision, due Wednesday, October 28 at 2:00 p.m. Eastern Time, is widely expected to leave the federal funds rate unchanged at 3.75% to 4.00% — a pause just six weeks after the Fed raised rates for the first time since 2023.

That consensus is striking: the data point the other way. Inflation accelerated in September, the economy is still expanding, and the Fed’s September projections pointed to another increase before year-end. What changed is the message: senior officials would rather wait for more evidence than rush a second hike, and a sharp rise in long-term bond yields has already done some of the Fed’s tightening work for it.

This week’s meeting, then, is less about Wednesday’s decision — which markets have largely settled — and more about what the statement, and Chair Kevin Warsh’s press conference, say about December.

What is expected on Wednesday

Two independent gauges point the same way. In a Reuters poll conducted October 16–20, 94 of 100 economists expected the Fed to hold its 3.75%–4.00% target range at the October 27–28 meeting. All 100 expected a rate hike in December — a sharp reversal from the previous month’s poll, when fewer than half expected a December move.

Market pricing agrees: rate futures priced about a 90% chance of a hold as of Friday, according to Reuters’ October 26 report, and swap pricing put hike odds at just 11%. The Federal Open Market Committee (FOMC) raised rates by 25 basis points at its September 15–16 meeting in a unanimous vote. This week’s meeting carries no new projections or dot plot, which makes a surprise move less likely.

How October hike odds collapsed

The most useful picture of this meeting is not a single odds number but the path prices took to get here. October hike expectations swung violently over five weeks, and that whipsaw explains officials’ caution. The table below compiles published readings from CME FedWatch, swap pricing and prediction-market trackers; different rows use different instruments, so read them as a direction of travel, not a precise series.

Table 1 — October hike odds timeline:

The September CPI report — headline inflation of 3.7% year on year, up from 3.4% in August — briefly doubled hike odds in a single day, then failed to hold them. Officials’ messaging mattered more than the data: once Vice Chair Philip Jefferson and New York Fed President John Williams signalled no urgency to move, markets listened. The bond market helped, too: longer-dated Treasury yields surged to multi-decade highs on October 7, then retreated roughly 25 basis points as hike odds faded — tightening that, in effect, substituted for a rate rise.

The case for holding — and the case for hiking

The case for a hold rests on three arguments. The labour market has cooled — payrolls grew by only 29,000 in September, unemployment stood at 4.2% — and with the economy still digesting the September hike, waiting costs little. The jump in Treasury yields since September has also raised borrowing costs across mortgages and corporate debt, giving the Fed reason to let that tightening work before adding more.

The case for hiking is, on the numbers, arguably stronger. Headline CPI rose 0.6% in September alone, driven by gasoline up 9.1% in the month and 34.2% over the year; energy overall is up 20.4% over twelve months. Core CPI rose to 2.6% year on year from 2.4% in August. Inflation has run above the Fed’s 2% target for more than five years, and September’s meeting minutes record most participants seeing another increase as likely appropriate before year-end.

Both cases can be true at once, which is why this meeting is a pause rather than a verdict. A hold does not mean tightening is over; it means the Committee wants one more round of data before deciding on December.

What to watch in the statement and press conference

With the decision largely priced, four things matter on Wednesday. First, the statement’s language on inflation: stronger wording would signal December is not automatic, while keeping the door open to further increases would confirm the base case. Second, dissent: three members dissented in favour of a hike in July, and a repeat would show the hold is contested, not comfortable. Third, Warsh’s press conference: the Chair says he is “not in the forward guidance business,” so his answers on December will be parsed word by word. For background, see our guide, How the Fed Sets Interest Rates: A Complete Guide. Fourth, any acknowledgement that higher long-term yields have tightened conditions — a reason the Fed can afford to wait.

What comes next

The calendar after Wednesday is unusually compressed, which is why December — not October — is the live meeting. The Bureau of Economic Analysis is scheduled to release the advance estimate of third-quarter GDP and the September Personal Income and Outlays report, including the PCE price indexes, on Thursday, October 29 at 8:30 a.m. Eastern Time. Those are scheduled releases, not results: September PCE has not yet been published. One bank forecast reported by FXStreet expects core PCE to rise 3.1% over the year — a forecast, not an official figure; August’s official core reading was 3.0%.

Table 2 — What to watch:

That sequence explains the apparent contradiction: a near-certain hold this week alongside a near-certain hike in December. Traders are not saying the Fed is done; they are saying it wants the October CPI, the November jobs report and the September PCE data — all due before December 9 — before it moves again. If those reports come in hot, December’s hike gains conviction. If they soften, today’s solid December consensus could unravel as fast as October’s hike odds did.

For the inflation data behind this debate, see our explainer CPI vs PCE Inflation: What’s the Difference? and our September CPI coverage, Hot September CPI Lifts Fed October Hike Odds.

This article is for informational purposes only and is not financial advice. Market pricing and survey expectations cited here are snapshots that move daily and are not guarantees of future policy decisions.