Fed Likely to Hold Rates Steady as Inflation Tops 3.7%

The Federal Reserve is expected to announce a decision to keep interest rates unchanged at 2:00 p.m. Eastern Time on Wednesday, October 28, 2026. This move would maintain the benchmark rate in the range of 3.75% to 4.00%. The central bank’s pause comes after annual inflation rose to 3.7% in September, up from 3.4% in the previous month.

Market data from CME FedWatch indicates that traders assigned a 90% probability to the bank holding its current stance. This expectation reflects a consensus that policymakers need more data before determining if the cost of money should rise again. The decision follows a unanimous vote in September that raised the rate range from 3.50% to 3.75%.

Inflation data released by the Bureau of Labor Statistics shows a 0.6% monthly increase in September. Gasoline prices jumped 9.1% over the month, accounting for more than half of the total price gain. In the New York, Newark, and Jersey City region, prices climbed 4.5% annually. Energy costs in that metropolitan area surged 21.5%, while food prices rose 2.7%.

The pause in rates will not lower costs for consumers with variable-rate debt. Credit card interest rates, auto loans, and home equity lines of credit will likely remain near current levels. The average 30-year fixed mortgage rate stood at 7.32% on October 22, compared to 6.19% a year earlier, according to Freddie Mac. This high level of financing costs continues to pressure household budgets in the region.

Federal Reserve officials cited strong economic activity and a labor market near full employment in their September minutes. Philip Jefferson, vice chair of the Federal Reserve Board, stated that he and his colleagues would reach their own judgment, which might take more time. This caution allows the bank to observe how the September hike affects consumer spending and employment.

Economists surveyed prior to the meeting projected that 94 out of 100 would expect rates to remain steady on Wednesday. The same group forecasted a rate increase in December. Futures markets placed a 76.2% probability on a hike during the final meeting of the year. The Federal Reserve will hold that meeting on December 8 and 9, which will include updated economic projections.

Attention will turn to potential dissenting votes during the December session. Beth Hammack, president of the Federal Reserve Bank of Cleveland, and Lorie Logan, president of the Federal Reserve Bank of Dallas, are among officials who may favor an immediate rate increase. They view the current level of rates as insufficient to control persistent inflation.

Kevin Warsh, the Federal Reserve chair, will hold a press conference at 2:30 p.m. Eastern Time following the announcement. The decision will determine whether the central bank maintains its current policy or shifts course. Any changes in inflation, employment, or growth data between now and December could alter the expected path for interest rates.