Fed Decision Day: A Hold at 3.75%–4.00% Is Expected — the Real Fight Is Over December

Highlights

• The Federal Open Market Committee announces its decision at 2:00 p.m. ET on Wednesday, October 28, 2026, followed by Chair Kevin Warsh’s press conference at 2:30 p.m. ET
• A Reuters poll of 100 economists conducted October 16–20 found 94 expect the federal funds target range to stay at 3.75%–4.00% — and all 100 expect a rate increase at the December 8–9 meeting
• The current range was set on September 16, when the committee voted 12–0 to raise it by a quarter point — the Fed’s first increase since July 2023
• September inflation ran at 3.7% over 12 months, with the energy index up 20.4% and core inflation at 2.6%, against the Fed’s 2% longer-run goal
• Prediction market Kalshi priced a 92.1% chance of a hold on October 27, while CME FedWatch put the odds of an October hike at just 10.5% on Monday afternoon

What is actually being decided today

The Federal Reserve opened its two-day policy meeting in Washington on Tuesday, October 27, 2026, and will announce its decision at 2 p.m. ET on Wednesday, October 28, followed by Chair Kevin Warsh’s press conference at 2:30 p.m., according to the Federal Reserve’s October calendar (The Boston Report). The October gathering is one of eight regularly scheduled FOMC meetings this year, and it is not one of the meetings paired with a Summary of Economic Projections — so there will be no new dot plot today, and the statement and the vote carry the whole signal (The Boston Report). The next meeting is set for December 8–9 (The Boston Report).

The rate itself starts the meeting at 3.75% to 4.00%, where the committee put it on September 16 in a unanimous 12–0 vote to raise the target range by a quarter percentage point (The Boston Report). The September statement said economic activity “is expanding at a solid pace”, that domestic spending “has been resilient” and that “Inflation remains elevated”, and it added: “The Committee will deliver price stability” (The Boston Report). InvestmentNews reported that the September move was the Fed’s first rate increase since July 2023 (The Boston Report).

The consensus is unusually lopsided — in two directions at once

A Reuters poll of 100 economists, conducted October 16 to 20, found that 94 expected the Federal Reserve to hold the federal funds rate in a range of 3.75% to 4.00% at the October 27–28 meeting (PipTheory). The same poll produced a much stronger consensus about what comes next: all 100 respondents expected a rate increase in December — a sharp change from the previous month’s poll, when less than half expected a December move (PipTheory).

Markets are close to economists on today and noticeably less certain about December. Kalshi, the CFTC-regulated US prediction market, priced a 92.1% probability of the target range being left unchanged at the October meeting, based on prices taken on October 27 (EconoTimes). CME Group’s FedWatch tool put the odds of a quarter-point hike this week at 10.5% as of Monday afternoon, down from 33.8% on October 14, while implying odds of more than 80% for at least one increase by the end of the year (The Boston Report). PipTheory, summarising the same futures pricing, put the chance of a December hike at about 71% (PipTheory). That gap — 100% of polled economists expecting a December hike against roughly seven-in-ten market pricing — is the distance today’s statement, vote and press conference can move, and it is why a meeting whose outcome is barely in doubt can still shift the dollar: PipTheory’s preview makes the same point, that the gap, not the rate itself, is what moves markets (PipTheory).

One reason Warsh’s words will be parsed so closely is that he has declined to pre-commit. CNBC noted in an October 16 analysis that Warsh has rejected traditional forward guidance, and that he said at an International Monetary Fund event in Bangkok that he was not signalling a decision one way or the other (The Boston Report). Some analysts have warned against treating even today’s outcome as settled on exactly that basis (The Boston Report).

Why the Fed is stuck: inflation is an energy story, mostly

The data behind the dilemma is the September consumer price index. The CPI rose 0.6% on a seasonally adjusted basis in September after a 0.4% gain in August, and over 12 months prices rose 3.7%, up from 3.4% in the year to August, according to the Bureau of Labor Statistics figures cited by The Boston Report (The Boston Report). Energy accounted for much of the jump: the BLS energy index climbed 20.4% over the year, while the core index excluding food and energy rose 2.6%, food prices rose 2.5%, and the Fed’s stated long-run inflation goal remains 2% (The Boston Report). Brent crude settled at $116.72 on October 23, a figure PipTheory’s preview identifies as the energy pressure sitting behind the headline number (PipTheory).

That split — a 3.7% headline with a 2.6% core — is the committee’s whole problem in one line. Raise rates into an energy shock and you squeeze households for price rises that interest rates cannot fix; hold too long and the energy inflation can leak into expectations and wages. It is the same squeeze being felt very differently in Pakistan, where the State Bank raised its policy rate to 12% this month, and it is why gold and silver sold off ahead of this meeting even as oil held above $115.

The three things that will actually be news at 2 p.m.

First, the vote. September’s hike was unanimous at 12–0, but July’s hold carried three hawkish dissents, and a dissent in favour of a hike today would be the clearest hawkish signal on offer (PipTheory). A unanimous hold is not assured: BMO chief US economist Scott Anderson said he expects at least one dissent, from Cleveland Fed President Beth Hammack, according to a preview published by SEE News, while TD Securities analysts cited by Semafor predicted three dissents from a hold — analyst forecasts, not outcomes (The Boston Report).

Second, the statement’s language on December. With no projections at this meeting, any change in how the committee describes inflation and the balance of risks is the closest thing to a signal traders will get before the press conference.

Third, what arrives after. Two major reports land one day after the decision: the Bureau of Economic Analysis is scheduled to release September personal income and outlays — which include the PCE price index the Fed prefers — along with the advance estimate of third-quarter GDP, on Thursday, October 29 at 8:30 a.m. ET (The Boston Report). Whatever Warsh says today will be re-tested against that data within 24 hours.

How markets are positioned going in

The clearest evidence of positioning is how fast it has already moved: FedWatch odds on an October hike fell from 33.8% on October 14 to 10.5% by Monday afternoon (The Boston Report), and Investing.com put the 10-year Treasury yield at 4.963% as of Monday (The Boston Report). In other words, the hold is priced; the trade is in the language. A hold delivered with September’s “will deliver price stability” tone intact would validate the December expectations economists hold unanimously. A hold that softens on inflation would hand the meeting to the roughly three-in-ten of futures pricing that doubts December — and that repricing, not the rate, is the story to watch at 2:30 p.m. when Warsh takes questions.

The bottom line: today’s decision is the most predictable part of the Fed’s year — a hold at 3.75%–4.00% that 94 of 100 polled economists, a 92.1% prediction-market price and a 10.5% futures-implied hike chance all point to. The substance is everything around it: whether anyone dissents for a hike, whether the statement keeps December live, and whether Warsh — six days before the November 3 midterm elections, with the federal funds rate flowing through to credit cards, home equity lines and business loans (The Boston Report) — says anything that closes the gap between what economists expect in December and what markets are willing to price.