94 of 100 Economists Expect Fed to Hold Rates at October Meeting
Key Facts
The Federal Reserve is expected to leave rates unchanged at its October 27-28 meeting, with 94 of the 100 economists surveyed by Reuters expecting it to hold the target range at 3.75% to 4.00%. The decision is due on October 28, the same day as the scheduled press conference, according to the central bank’s calendar. The poll points to a hold at the next meeting, while all 100 participants expect a rate hike in December. That marks a sharp shift from the previous month’s poll, when fewer than half of economists expected a December hike. These are forecasts from economists who took part in the poll, not market pricing or a decision by the Fed.
The meeting follows the Fed’s September 16 quarter-percentage-point increase in the target range to 3.75%–4.00%. Committee members approved the decision unanimously, with a 12-0 vote, according to the central bank’s statement. The statement said economic activity was expanding at a strong pace and domestic spending had remained resilient, while inflation remained elevated. That assessment puts the October meeting against a backdrop of strong activity and continuing price pressures. Markets are awaiting the committee’s decision in light of the current range and the Fed’s September assessment.
The next inflation test comes soon after the meeting: the Bureau of Economic Analysis will release September personal income and spending data on October 29 at 08:30 a.m., including the personal consumption expenditures price index. The Associated Press said the index’s annual reading could reach 3.7% in September, compared with the Fed’s 2% target. That is a forecast, not a published result; the bureau’s latest data show consumer spending rose 0.9% in August, after a 0.1% increase in July. September’s data will follow the rate decision by one day, adding new information on prices and spending to assessments of the monetary policy path. The release date puts an inflation reading directly on the calendar for the week after the meeting.
Ahead of the meeting, Visa closed at $408.28 on October 23, while Coca-Cola closed at $95.34 on October 22, according to EL7 data. The closing prices indicate how the two stocks performed on those days, but do not by themselves establish the direction of consumer spending or corporate activity. No verified price for Nucor stock was included in the available data, so no price is cited here. The facts provided also do not include confirmed earnings dates or comments from the three companies about their results. In the broader market, U.S. indexes fell in Friday, October 23 trading: the S&P 500 dropped 0.4%, the Dow Jones fell 591 points, or 1.1%, and the Nasdaq declined 0.1%.
The stock decline coincided with higher oil prices and a rise in the yield on the 10-year U.S. Treasury note. Brent crude rose 2.8% to $111.69 a barrel on Friday, after trading below $97 at the start of October, reaching its highest level since March, according to the Associated Press. The 10-year yield rose to 4.99% from 4.96% at Thursday’s close. Reuters’ report on the following week included expected earnings disclosures from companies accounting for about one-third of the S&P 500, in a test of expectations for third-quarter profit growth. Companies mentioned included Eli Lilly, Exxon, Chevron and Caterpillar, as well as Alphabet, Microsoft and Amazon.
Reuters also reported growing investor caution over the risks of data center spending, saying results from major cloud computing companies would help assess the case for massive capital investments tied to artificial intelligence. This comes during a week the report described as important for gauging whether third-quarter profit growth will match elevated expectations. The nearest monetary policy milestone remains the Fed decision scheduled for October 28, following the committee’s October 27-28 meeting. The next day, September personal income and spending data, including the personal consumption expenditures price index, will be released at 08:30 a.m. The forecast of a December rate hike is based on responses from the 100 economists in Reuters’ October poll.