Markets expect the Federal Reserve to hold rates at its Oct. 27-28 meeting, while an Atlanta Fed options tracker puts the chance of an increase by Dec. 16 at 86.86%.
The committee meets Tuesday and Wednesday and is scheduled to announce its decision at 2 p.m. ET (18:00 UTC) Wednesday. It raised its target range by 25 basis points in September to 3.75%-4.00%, effective Sept. 17. In the September meeting minutes, participants saw room for another increase before 2027, while leaving later policy decisions dependent on incoming data.
The Atlanta Fed tracker uses options prices to estimate market expectations. Its Oct. 23 reading applies to the chance of a move by Dec. 16; it does not isolate the odds of an increase at the Dec. 9 meeting and is not a Fed forecast.
Other market assessments have pointed to an October hold. Kiplinger reported Oct. 23 that CME FedWatch put the chance of no change at 88%. FXStreet reported Oct. 26 that Brown Brothers Harriman estimated a 10% chance of an October increase and judged markets to have already accounted for much of a December move. These are separate market assessments, not official Fed guidance. EconoTimes previously covered Brown Brothers Harriman’s expectation of an October hold ahead of the inflation and GDP releases.
The Bureau of Labor Statistics (BLS) reported that the consumer price index rose 0.6% in September from August on a seasonally adjusted basis, and 3.7% over 12 months. The measure excluding food and energy increased 0.3% for the month on a seasonally adjusted basis and 2.6% over the year. The latest published personal consumption expenditures (PCE) data, for August, showed the overall index up 3.4% annually and the measure excluding food and energy up 3.0%.
The September minutes identified energy costs, investment tied to artificial intelligence and possible additional tariffs as factors that could push prices higher. They said financing conditions were tighter for small businesses and residential mortgage borrowers, while larger businesses and municipalities generally had more accommodative conditions.
FXStreet reported that Brown Brothers Harriman strategist Elias Haddad viewed further tightening as a source of support for the dollar’s relative yield appeal. The Bureau of Economic Analysis (BEA) is scheduled to release September PCE data and its advance estimate of third-quarter GDP on Oct. 29 at 8:30 a.m. ET (12:30 UTC), after the Fed’s decision. The Atlanta Fed’s GDPNow estimate for third-quarter growth was 3.5% at an annualized rate on Oct. 20; the New York Fed staff nowcast was 2.7% on Oct. 23. The Fed’s next scheduled meeting is Dec. 8-9.
