The Federal Reserve began its two-day policy meeting on Tuesday as high inflation continues to pose a problem for central bankers who nevertheless appear reluctant to raise rates this month.
Fed watchers expect the central bank to keep its benchmark rates in the range of 3.75% to 4%, with bond traders pricing in a less than 10% chance of a hike on Wednesday, according to the CME Group. A December rate hike seems much more likely, however, according to the dot plot and federal funds futures.
Although recent inflation data has been more positive than expected, remarks from several officials suggest the Fed will hold rates on hold this month to continue evaluating additional data. The proximity of the October meeting to next Tuesday’s U.S. midterm elections is also seen as a brake on bold monetary policy moves.
While the Fed’s holding of rates is taken for granted, the focus is on what Fed Chairman Kevin Warsh will say Wednesday at his post-FOMC meeting news conference. Warsh deliberately avoided telegraphing the Fed’s future policy actions, but high inflation could give him insight into the path forward.
LIVE 3 updates
Fed expected to keep rates steady this week despite high inflation – but signals it’s not done raising rates
The Federal Reserve begins its interest rate decision this week in the face of higher inflation, keeping the meeting live even as markets widely expect the central bank to keep interest rates steady just days before the midterm elections.
Alan Blinder, former Fed vice chairman and economics professor at Princeton University, expects a “hawkish pause.”
Although Fed Chairman Kevin Warsh is not in favor of announcing the central bank’s next move, Blinder said this moment demands clarity.
“This is the perfect time for clear forward guidance that doesn’t outright say, but strongly suggests, that we are pausing now, but we are prepared to raise again and even hint that the next meeting could be the next interest rate hike.”
Learn more.
Federal Reserve Chairman Kevin Warsh holds a news conference following a two-day meeting of the Federal Open Market Committee (FOMC) at the Federal Reserve in Washington, DC, U.S., September 16, 2026. REUTERS/Evan Vucci/File photo · Reuters / REUTERS Fed meeting kicks off as traders generally expect no hike
The Federal Reserve’s two-day policy meeting began this morning at 9:30 a.m. ET, as scheduled, a Fed spokesperson confirmed.
Expectations remain firm that the Fed will keep rates in a range between 3.75% and 4% after a 25 basis point hike in September. Traders generally believe the Fed will raise rates again in December.
But in October, there is a strong belief that the Fed will not change rates. According to CME Group’s FedWatch, traders see a 90% chance of nothing moving.
Fed Probabilities
Gn bussni
