Overview
- Officials are widely expected to leave the federal funds rate at 3.75%–4.00% at the Fed’s Oct. 27–28 meeting, and futures traders price roughly an 80–90% chance of a hold.
- Markets and many economists see a high probability of one more quarter-point increase at the Fed’s Dec. 8–9 meeting if inflation does not ease.
- September consumer prices rose about 3.7% year over year and gasoline accounted for a large share of that monthly jump, feeding concern that energy costs could keep inflation elevated.
- Investors will focus on Warsh’s press conference because he opposes formal forward guidance and his language will shape expectations, while some regional presidents such as Beth Hammack and Lorie Logan are viewed as possible dissents favoring earlier tightening.
- Higher Treasury yields and mortgage rates near 7.3%–7.4% are already tightening financial conditions and raising borrowing costs for households, and the Fed’s choices come against pressure from President Trump over Fed policy and personnel.