3.75%–4.00% Range Expected to Hold at Fed’s October Meeting
Key Facts
The Federal Reserve is expected to keep its target rate range at 3.75%–4.00% at the conclusion of its meeting scheduled for October 27 and 28, 2026, the Associated Press reported ahead of the meeting. The decision had not been announced when those expectations were published, so a hold remains the likely outcome, not a settled result. The chair is due to hold a press conference on October 28, after the Federal Open Market Committee meeting concludes. The committee raised rates by a quarter percentage point in September, in a unanimous 12-0 vote, bringing the range to its current level. That puts October’s meeting at a clear crossroads: expectations of a near-term pause meet a signal in the previous meeting’s minutes that another increase could come before year-end.
Minutes of the September meeting showed that most participants saw another increase in the range as likely to be appropriate by year-end. Participants tied future decisions to incoming economic information and its implications for the outlook and the balance of risks, leaving the policy path open to the data. At the same time, the minutes recorded a rise of about 35 basis points in nominal Treasury yields across maturities from two to 10 years between the September meetings. The minutes attributed part of the increase to the expected path of monetary policy and to strong economic data. The backdrop shows that the expected October pause follows earlier tightening, while the possibility of a later increase remains in officials’ assessment.
Prices remain central to that assessment. The Bureau of Labor Statistics said the core consumer price index, excluding food and energy, rose 0.3% in September and 2.6% over the 12 months through the same month. The gasoline index jumped 9.1% in September, accounting for more than half of the monthly increase in the all-items index. The energy index rose 5.2% for the month, after a 2.1% increase in August, according to the bureau. The Associated Press estimated that personal consumption expenditures inflation rose to 3.7% in September from 3.4% in August, compared with the Fed’s 2% target. These readings differ between core consumer prices and expectations for the personal consumption expenditures index, but put price indicators at the center of the debate ahead of the meeting.
In bond markets, the two-year Treasury yield stood at 4.71% on October 26, up from 4.69% late the previous Friday, according to the Associated Press. The agency had reported that the 10-year yield was 4.99% on October 23, compared with 4.96% late the previous day. It said markets expected the central bank to keep rates steady at its meeting, with a strong bias toward another increase in December. Those expectations align with the September minutes, which said most participants saw another increase as potentially appropriate before year-end. But the October decision had not yet been announced, while the minutes kept the committee’s decisions tied to incoming data and its implications for the outlook and the balance of risks.
Attention will turn after the meeting to October 29, when the Bureau of Economic Analysis is scheduled to release its advance estimate of third-quarter gross domestic product and its September personal income and outlays report at 8:30 a.m. Eastern time. The Associated Press forecast economic growth of 1.7% in the third quarter, compared with 2.2% growth in the second quarter, with the advance estimate due Thursday. The income and outlays report includes the September reading of the personal consumption expenditures index, according to the bureau’s schedule. The October consumer price index is scheduled for release on November 10, 2026, at 8:30 a.m. Eastern time, according to the Bureau of Labor Statistics calendar. These releases will follow the October meeting, providing subsequent readings on growth and prices as part of the information informing the committee’s future decisions.