Last updated: October 27, 2026
The Federal Reserve opened its two-day policy meeting Tuesday with traders pricing roughly a 93% chance the central bank holds rates steady Wednesday, even as persistent inflation and a Reuters survey showing every polled economist expects a December rate hike complicate the outlook for the months ahead.
A Pause Is Priced In, But Not For Long
The FOMC’s October meeting looks like a formality to markets, but economists are near-unanimous that a December hike is coming next.
A Pause Is Almost Fully Priced In
The Federal Open Market Committee began its two-day meeting Tuesday, with a decision due Wednesday afternoon around 2 p.m. ET followed by Chair Kevin Warsh’s press conference. Prediction market Kalshi puts the odds of a hold at roughly 93%, with just 6% on a quarter-point hike and 1% on a cut. That lines up with a Reuters poll of 100 economists conducted October 16-20, in which 94 expected an October pause — and all 100 said they expect the Fed to raise rates again in December. Warsh himself offered little guidance at a recent IMF event, saying only “I don’t prejudge meetings,” remarks Goldman Sachs read as a signal the Fed is leaning toward sitting still this week before moving again before year-end.
Why the Fed Is Hiking Into a Softening Economy
The backdrop here is unusual: the Fed hiked rates 25 basis points in September, its first increase since 2023, defying repeated calls from President Trump for cuts. The move was driven largely by energy-price inflation tied to the Iran war’s disruption of oil supply chains, compounding a stretch of roughly five years in which inflation has stayed above the Fed’s 2% target with little sustained progress. That hawkish turn has already shown up in hard data — mortgage rates recently hit three-year highs and homebuilder confidence slid to its lowest level since 2012 — while September’s hotter-than-expected CPI report and a subsequently hot PPI print, the largest monthly jump since 2022, kept hike bets alive even as the Fed signaled it wasn’t in a rush to move again so soon after September’s increase.
Markets Are Calm Heading Into the Decision
For now, broader markets are relatively steady: the 10-year Treasury yield sits near 4.99%, the VIX has eased to about 17.75, and gold has pulled back slightly to roughly $4,033.60 an ounce. Oil remains a wildcard — Brent crude is holding near six-month highs, caught between hopes for Middle East diplomacy and renewed attacks on Saudi Arabia that have kept a floor under prices. Crypto has felt the mix of geopolitical risk and rate uncertainty most acutely, with Bitcoin extending a multi-day slide toward $80,000 as traders brace for Wednesday’s decision.
Why It Matters
Wednesday’s decision lands in the middle of one of the heaviest news weeks of the year: Microsoft and Alphabet report earnings the same afternoon as the Fed’s announcement, with Amazon following Thursday — see our previews for Microsoft, Alphabet, and Amazon. It also follows Monday’s Anthropic IPO filing, which sent chip stocks sharply higher on renewed AI-trade optimism. A hawkish surprise Wednesday, or language that firms up December hike expectations, could test that optimism quickly; a more measured tone could give risk assets more room to run into a historically strong earnings stretch. For more on the names most exposed to rate policy, visit our Stock Fact Sheets hub.
Related Coverage on FactSheets.com
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- Hot PPI Follows Hot CPI as Fed-Hike Bets Return
- The Fed Just Hiked Rates for the First Time Since 2023
- Anthropic Files for Its IPO at Up to a $2 Trillion Valuation
- More Federal Reserve Coverage →
- Stock Fact Sheets Hub
For informational purposes only. Not investment advice. Interest rate odds, economist survey figures, and market data cited above are as of the date noted and subject to rapid change; always do your own research or consult a licensed financial advisor before making investment decisions.
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