Fed decision: markets expect a pause, but Warsh's inflation fight keeps a hike on the table

The US Federal Reserve announces its next interest-rate decision on Wednesday, 28 October, at 2 p.m. ET (18:00 GMT). Chair Kevin Warsh holds a press conference 30 minutes later.

Where rates stand

In September the Fed raised its benchmark rate by a quarter point, to 3.75%–4%. It was the first increase since July 2023, and the vote was unanimous. Officials' median projection then pointed to one more rise before the end of 2026.

What markets expect

Traders on Kalshi put the chance of a hold at 93%. Fed funds futures, tracked by CME Group's FedWatch tool, priced less than a 10% chance of a hike this week. Still, about three-quarters of traders expect at least one more increase by year-end, CNBC reported.

The oil problem

Brent crude settled near $116 a barrel this week. Energy costs, which have been pushed up by supply disruption linked to the Iran war, are feeding inflation. The Trump administration says the price rises are "entirely driven by an energy supply shock" that higher rates can't fix. Warsh has called the Fed's 2% inflation goal "a firm, fixed target."

"I don't prejudge meetings," Warsh said this month. A Bank of America economist warned that if the Fed holds, "markets could question the Fed's inflation-fighting credibility."

What it means for you

• Mortgages and loans: a hold keeps borrowing costs roughly where they are; a hike would push variable rates up.
• Savings: rates on savings accounts are likely to stay at their current levels.
• Watch for: any signal from Warsh about a December rise.