Fed Expected to Hold Rates This Week Amid Persistent Inflation Pressures
The Federal Reserve is slated to announce its October policy decision, with most analysts forecasting no change to the benchmark rate as inflation remains above target.
The Federal Reserve will meet on Wednesday to release its latest policy statement and decide whether to adjust the benchmark interest rate, which currently sits in a 3.75% to 4% range. Most economists and Wall Street analysts anticipate that the Fed will keep rates unchanged, according to market expectations.
Headline inflation rose 3.7% year-over-year in September, driven largely by higher energy costs, while core inflation—excluding volatile energy and gasoline—advanced 2.6% from a year earlier. The central bank’s long-term inflation target remains 2%.
"Although the latest hot inflation readings and rise in inflation expectations will concern Fed officials, they still appear broadly intent on tightening policy at a measured pace," said Thomas Ryan, senior North America economist at Capital Economics.
In September, the Fed lifted the federal funds rate by a quarter-point, its first increase in three years. The next decision is scheduled for 2 p.m. ET on Wednesday.
Market data from CME Group’s Fed Watch tool show an 88% probability that rates will be held steady in October and a 71% chance of a hike at the December meeting, the Fed’s final policy session of the year.
New York Fed President John Williams noted that the September action reduces any immediate urgency for further tightening, adding that the bank has time to gather more information. Fed Chairman Kevin Warsh is expected to hold a press conference after the decision, though he has previously resisted providing forward guidance on rate moves.