Key Notes
- Economists in a Reuters poll overwhelmingly expect the Fed to hold its benchmark range at 3.75%–4.00% on October 28.
- All 100 respondents anticipate a December increase, while the next policy decision remains with the Federal Open Market Committee.
- September consumer inflation rose to 3.7%, while payroll growth slowed to 29,000, complicating the balance between price stability and employment.
The Federal Reserve is expected to leave interest rates unchanged on October 28 before raising them in December, a Reuters poll showed, putting the timing of further tightening at the center of the year-end economic outlook.
In the October 16–20 survey, 94 of 100 economists predicted an October hold at 3.75%–4.00%, while all 100 expected a December increase, Reuters reported. The responses are economists’ forecasts, rather than a policy commitment from the central bank.
The distinction matters for investors and borrowers: a pause this month would leave the existing rate in place, while preserving the possibility of higher financing costs before the year ends.
An October Pause Would Follow September’s Rate Increase
The Fed raised its target range by a quarter of a percentage point on September 16, with all 12 voting policymakers supporting the move. Its statement described solid economic growth, resilient domestic spending and robust capital investment, alongside elevated inflation.
The official meeting calendar schedules the next Federal Open Market Committee gathering for October 27–28 and the final meeting of 2026 for December 8–9. December also brings an updated Summary of Economic Projections.
A further quarter-point increase, if delivered from the current range, would take the benchmark to 4.00%–4.25%. Holding in October would therefore be consistent with another increase later, rather than necessarily marking the end of tightening.
September Inflation Keeps Pressure on Policymakers
The latest consumer-price figures help explain why another rate increase remains in view. September’s CPI rose 3.7% from a year earlier, up from 3.4% in August, according to the Bureau of Labor Statistics’ release.
Prices increased 0.6% over the month. The core index, which excludes food and energy, rose 2.6% annually. We previously reported how the release increased scrutiny of the Fed’s next move.
The central bank’s 2% objective is defined using the personal consumption expenditures price index, not CPI. The measures cover spending differently, so the CPI figures cannot be treated as interchangeable with the Fed’s preferred gauge.
Slower Hiring Complicates the Rate Decision
The employment picture supplies a reason to examine the pace of tightening carefully. Nonfarm payrolls increased by 29,000 in September and unemployment was 4.2%, the BLS reported. August’s payroll gain was revised down to 133,000 from 162,000.
We covered the September hiring report earlier this month. Combined with rising consumer inflation, the figures present policymakers with a less straightforward decision than either release would suggest in isolation.
The Fed must weigh employment conditions alongside price stability. Weak hiring does not automatically determine the next rate decision, just as one strong inflation reading does not establish how many increases will ultimately be needed.
Borrowing Costs Depend on More Than One Meeting
The Fed’s policy framework explains that changes in the federal funds rate pass through to short-term credit and many floating-rate loans. Longer-term borrowing costs also reflect expectations about the future economy and the path of rates.
That is why an October hold would not guarantee lower mortgage rates or cheaper corporate financing. Investors can adjust longer-term rates in anticipation of a later policy change, while lenders also assess the risk of individual borrowers.
The same distinction applies to interpreting the poll. Ninety-four economists forecasting a hold does not establish a 94% market-implied probability. A survey counts respondents’ predictions; pricing in traded contracts reflects a different set of information and incentives.
December’s Outlook Will Be Tested by Incoming Data
The immediate milestone is the October 28 decision and its accompanying explanation. A hold could carry different implications depending on whether policymakers emphasize persistent price pressures, employment risks or the need to assess earlier tightening.
Between the October and December meetings, further economic releases will test the case for another increase. The Fed says it examines inflation over time and looks beneath headline readings to judge whether price changes are likely to persist.
For now, the survey points toward a pause followed by renewed tightening. Whether that sequence becomes policy will depend on the FOMC’s assessment of the economy, with December’s projections offering a further indication of how officials see the rate path developing.
