Macro
Fed expected to hold on October 28, with a December hike firmly priced
Markets see about an 80% chance of no move next week as inflation stays stubbornly above target.
HedgeWeekly News Desk ·
The Federal Reserve is widely expected to leave its benchmark rate at 3.75% to 4% when policymakers meet on October 28. CME FedWatch pricing puts the chance of a hold at around 80%, while markets have largely locked in a rate increase at the December 9 meeting, when officials also publish new projections.
Inflation has run above the Fed's 2% goal for five years, and recent readings have shown no clear progress. Energy price spikes and supply disruptions in the Middle East have added to the pressure. At the September meeting, most officials pencilled in one more hike this year and a handful saw two. Three policymakers dissented in favor of higher rates back in July.
Chair Kevin Warsh has stepped back from forward guidance, which leaves traders with less to go on between meetings. Bond markets now project consecutive increases into early 2027, with short-term rates potentially reaching 5%. Any hint that October is live would be a surprise for a market that has priced a quiet meeting.