Odds of a Rate Hike Reach 85% After Fed Holds Range at 3.75% to 4%

Key Facts

The US Federal Reserve kept its target interest rate range at 3.75% to 4% on October 28, while traders’ bets on a December increase rose to 85%, Axios reported, citing the Chicago Mercantile Exchange’s FedWatch tool. The decision came amid a split within the Federal Open Market Committee, with two members favoring a quarter-percentage-point increase. The Fed said economic activity was expanding at a strong pace and domestic spending remained resilient, but also noted that inflation was still elevated. It added that the accumulation of more information would help the committee determine the appropriate policy stance. These signals put data due in the coming weeks at the center of expectations for the December meeting, without meaning a rate hike has been decided.

Lisa Cook and Beth Hammack dissented from the decision to hold the range, favoring a 0.25-percentage-point increase at the October meeting. Their dissent showed that some committee members saw a case for moving now, while the majority chose to keep the existing range. The Federal Reserve statement did not characterize the decision in broad terms; it set out its assessment of activity, spending and inflation, and tied the next step to obtaining additional information. The Fed’s inflation target is 2%. The statement said, “The accumulation of more information will help the committee determine the appropriate policy stance to ensure inflation returns to the committee’s 2% target in a timely manner.” The contrast between the vote and the statement provides context for market bets on the December meeting, without turning them into official guidance from the Fed.

Axios reported on October 28 that traders saw an 85% probability of a December rate hike, citing the Chicago Mercantile Exchange’s FedWatch tool. The figure represents a market estimate of probabilities that day, not a decision by the Federal Reserve. Markets are watching September personal consumption expenditures inflation data; the Bureau of Economic Analysis listed the release of its personal income and outlays report for October 29 at 8:30 a.m. Eastern time. The report includes personal consumption expenditures price data. The release is due after the October decision, and the Federal Reserve said more information would help it determine the appropriate policy stance. The report therefore bears directly on the inflation assessment that the Fed said remained elevated and on its stated 2% target.

In the labor market, the latest Labor Department report available before the October 29 release showed 194,000 initial jobless claims for the week ended October 17. The number fell by 6,000 from the previous week’s revised level, according to the department. These figures are a reading from before the expected release date and do not include a new result for claims in the following week. Alongside the personal consumption expenditures report, claims data give traders a way to track economic indicators that inform assessments of the monetary policy path. The Federal Reserve had said economic activity was expanding at a strong pace and domestic spending was resilient. But it said the committee needed to accumulate more information to determine the appropriate stance, with inflation still elevated.

US Census Bureau data showed new orders for manufactured durable goods rose 1.8% in September to $345.4 billion. That followed a revised 0.1% increase in August, when orders totaled $339.1 billion. The monthly acceleration provided another indicator of resilient domestic demand in the period before the October meeting. The Federal Reserve had pointed to resilient domestic spending and economic activity expanding at a strong pace. But its statement maintained that inflation was elevated and said additional information would help the committee determine its policy. The durable goods reading thus forms part of the economic backdrop to the hold decision, alongside inflation and labor market data that markets were watching.

In Bitcoin trading, EL7 data showed a daily close of $81,343.50 on October 28, followed by $80,905.95 on October 29. The two closes reflect a decline between the days but do not establish that the Federal Reserve’s decision caused the move. Reuters reported, via Investing.com, that Bitcoin rose 0.6% to $81,336.1 at 17:50 Eastern time on October 28, but was on track for a 3.2% loss for the month. The report said rising oil prices limited gains in cryptocurrencies after the Fed decision. It also said Bitcoin was on course for a second consecutive monthly loss, after October 2025 and October 2026. These indicators describe the asset’s performance at that time without attributing its moves to a single cause.

In US equities, the Associated Press reported that the S&P 500 rose 0.3% on October 28, after moving between modest gains and losses during the day, both before and after the Fed decision. In remarks reported by Reuters, Wersch said, “The period immediately ahead is rich with information,” and that he was encouraged by recent progress. His comments reflected an expectation of new data to help determine policy, not an announcement of a prior decision on December. The Federal Reserve is scheduled to hold its next meeting on December 8 and 9. Minutes from the October meeting will be published on November 18, and minutes from the December meeting on December 30. Those minutes and meeting dates will follow the release of October data, while the committee’s decision on the interest rate range remains tied to its assessment of the available information.