The Fed Decides Wednesday: A Pause Now, a December Hike Later

The Fed decides Wednesday — and almost nobody expects it to move

Short answer: The Federal Reserve meets on Tuesday and Wednesday, October 27-28, 2026, and is widely expected to leave its benchmark rate unchanged at 3.75% to 4.00%. In a Reuters poll of 100 economists, 94 expect a hold this week — but all 100 expect a rate hike in December. Market pricing tells the same story: about a 91% chance of a hold on Wednesday, and roughly a 75% chance of a hike by December.

That combination — a pause now, a hike later — is why this meeting is dominating the weekend finance conversation even with markets closed. Stocks just finished a rough week, oil settled at its highest level since April, and bond yields are sitting near 5%. What Chair Kevin Warsh says on Wednesday, not just what the Fed does, will set the tone for November.

What happened

The Fed raised rates by a quarter point in September — unanimously — taking the federal funds target to 3.75% to 4.00%, its first increase in three years after a series of cuts in late 2025. Since then, the inflation data has refused to cooperate. September consumer prices rose 0.6% on the month, with core prices up 0.3%, both slightly firmer than expected, and economists expect September core PCE inflation — the Fed's preferred gauge — to print at 0.3% as well, lifting the annual rate to about 3.1%.

Fed officials, however, have signalled they prefer a slower, more deliberate path, and Chair Warsh — who has made clear he is not keen on giving guidance — has kept quiet ahead of the meeting. The result is an unusual consensus: economists and traders agree the Fed will wait in October, then move in December. The Reuters poll, conducted October 16-20, found 94 of 100 economists expecting a hold this week and every single respondent expecting a December hike — a sharp reversal from the previous month, when fewer than half expected one.

Why it's blowing up

First, the timing is brutal. The decision lands just days before the November midterm elections, at the end of the worst week for technology stocks since June. The Nasdaq fell 2.6% on Thursday as investors balked at the cost of the AI build-out, and the Dow dropped 652 points on Friday. A hawkish surprise from the Fed would hit exactly the high-multiple stocks that are already wobbling.

Second, oil is feeding the inflation problem the Fed is trying to solve. Brent crude settled Friday at $116.72 a barrel, its highest close since April 29, after attacks on Saudi energy infrastructure and fears of U.S. strikes on Iran pushed prices up for a third straight week. Energy-driven inflation is precisely the kind the Fed cannot afford to let feed into expectations — and a core reason December hike odds keep climbing.

Third, the bond market has already been whipsawed. Longer-dated Treasury yields surged to multi-decade highs on October 7 as October hike odds rose above 50%, then retreated nearly 25 basis points when those odds collapsed. The 10-year yield ended Friday right around 5.00%. Traders are not really betting on Wednesday's decision — they are betting on Warsh's words about December.

Key facts

Current rate: Federal funds target of 3.75% to 4.00%, set by a unanimous quarter-point hike in September 2026.
The meeting: FOMC meets October 27-28; the decision is due Wednesday, October 28 at 2:00 p.m. ET, with Chair Kevin Warsh's press conference at 2:30 p.m. ET.
Economist consensus: 94 of 100 economists in the October 16-20 Reuters poll expect a hold this week; all 100 expect a hike in December.
Market pricing: About 91% odds of a hold on October 28 (about 8% for a hike, 1% for a cut), and roughly 75% odds of a hike by the December 9 meeting.
Inflation backdrop: September CPI rose 0.6% on the month and 0.3% core; annual inflation is running at about 3.7%.
Oil: Brent crude settled at $116.72 a barrel on Friday — its highest close since April 29 — and WTI settled at $103.27.
Bond market: The 10-year Treasury yield ended the week near 5.00%, after the biggest daily fall in yields in over a year during Thursday's stock sell-off.

What's next

The next 96 hours are stacked. Q3 GDP is due the day after the decision and is expected to be firm. Big technology earnings land the same week, which means Wednesday's statement will be read against both the inflation data and the AI spending debate that just knocked 2.6% off the Nasdaq. If Warsh signals December is live, yields near 5% could push higher and rate-sensitive stocks will feel it first; if he sounds patient, the December consensus itself could start to crack. This post reports what is expected and why markets care; it is not financial advice, and it is not a recommendation to buy, sell, or hold anything ahead of the decision.

Sources

FAQ

When is the Fed's October 2026 decision?

The FOMC meets October 27-28, 2026, and announces its decision on Wednesday, October 28 at 2:00 p.m. ET, followed by Chair Kevin Warsh's press conference at 2:30 p.m. ET.

Will the Fed raise rates in October 2026?

Almost certainly not, according to economists and markets: 94 of 100 economists polled by Reuters expect a hold at 3.75% to 4.00%, and futures pricing puts the odds of a hold at about 91%.

Why do economists expect a December hike instead?

Inflation is still running hot — September CPI rose 0.6% on the month — and all 100 economists in the Reuters poll expect the Fed to raise rates at its December meeting after pausing in October.

What is the current federal funds rate?

The target range is 3.75% to 4.00%, set by a unanimous quarter-point increase in September 2026 — the Fed's first hike in three years.

The Fed Decides Wednesday: A Pause Now, a December Hike Later — Why Markets Are Bracing