Fed Seen Holding at 3.75%–4.00% as December Hike Risk Builds

The Federal Reserve is widely expected to hold its benchmark rate at 3.75%-4.00% at its October 27-28 meeting, with CME FedWatch showing a 90% probability of no change. The policy statement is due at 2 a.m. Beijing time Thursday, followed 30 minutes later by Chair Kevin Warsh's press conference. The focus is whether a pause signals more time to assess data or preserves the option of another increase in December. Fed projections released last month indicated officials favored one further rate hike this year, while economists cited in the report expect the Fed to hold this week and potentially signal further tightening. September core PCE inflation is expected to rise 3.6% year over year, from 3.4% in August. The September unemployment rate was 4.2%, and Reuters-polled economists expect third-quarter GDP growth of 3.2%, compared with 2.2% in the prior quarter, before slowing to 2.2% in the fourth quarter. Dissent counts may also shape the policy signal. Three regional Fed presidents dissented in July in favor of a 25-basis-point increase, while one economist expects two dissents against holding rates unchanged this week. The Fed raised rates by 25 basis points in September. Treasury yields climbed after that move, with the 10-year yield at one point near a 25-year high, before easing recently amid an equity selloff tied to concerns over the sustainability of AI demand.