Fed Poised to Hold Rates Steady in October, With Focus on Possible December Hike

The Federal Reserve is expected to leave its benchmark interest rate unchanged this month despite persistent inflation pressures.

Bloomberg reported on October 28 that the Fed is likely to keep rates at their current level at its Federal Open Market Committee meeting on October 28. Markets are assigning less than a 10% chance of a 0.25 percentage-point rate increase at this meeting.

The Fed unanimously raised rates in September to curb inflation. Economic projections released at the time suggested the possibility of one additional increase before year-end. Markets also expect the central bank to hold rates steady at this meeting and deliver another hike at its final meeting in December.

Recent inflation data have reinforced the Fed's tightening stance. Consumer prices in September rose at the fastest pace in five months, while core inflation exceeded forecasts. Producer prices also climbed at their fastest pace in more than four years.

Stephanie Roth, chief economist at Wolfe Research, said the Fed is highly likely to leave rates unchanged at its October meeting, in line with market expectations. But recent inflation data have likely heightened concern among Fed officials, she added, meaning the central bank may indirectly signal its willingness to raise rates again.

Still, differences have emerged within the Fed over the timing of any further increase. Vice Chair Philip Jefferson and New York Fed President John Williams have said there is time to further assess economic conditions. Some regional Fed presidents, however, have emphasized the need for additional tightening because of persistent inflation pressures.

The FOMC decision will be released at 2 p.m. Eastern Time on October 28, and Fed Chair Kevin Warsh will hold a press conference 30 minutes later. Markets are likely to focus less on the rate decision itself than on the timing of any additional hike and Warsh's comments on inflation.