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Federal Reserve Set to Decide Interest Rates Amid Inflation Concerns
· Confirmed
In Short: The Federal Reserve will release its interest rate decision today, with markets expecting the central bank to hold rates steady despite growing inflation.
The Federal Reserve is set to release its interest rate decision today, with policymakers facing pressure to address rising inflation. According to ABC News (United States), policymakers may lose patience with the current level of interest rates, though markets expect the central bank to hold rates steady for now.
NBC News (United States) reported that the Federal Reserve will consider whether to raise interest rates to tamp down on inflation. Meanwhile, Fox Business (United States) noted that despite inflation remaining stubbornly high, the market expects the Fed to hold rates steady this week.
The CME FedWatch Tool, a measure of market sentiment, shows that investors put the chance of the Fed holding rates steady at about 90%, according to ABC News (United States). However, TradingKey (United States) reported that the odds of a quarter-point rate hike at the Fed's next meeting in December are pegged at 75%.
BBC (United Kingdom) reported that the Federal Reserve is expected to raise interest rates in a bid to slow inflation, while Jpost (Israel) noted that the Fed raised interest rates on Wednesday, flagging further increases in borrowing costs in the coming months.
The Federal Reserve raised interest rates by 25 basis points on Wednesday to a range of 3.75% to 4.00%, its first rate hike since 2023, as policymakers responded to renewed inflationary pressure, according to Oilprice (United States).
According to TradingKey (United States), the US will release the September Personal Consumption Expenditures (PCE) price index this Thursday, October 29. The PCE price index, which measures inflation, increased 3.7% in September compared to a year earlier, putting the inflation rate more than a percentage point above the Fed's target level of 2%, data showed.
The Bank of Japan raised interest rates to a more than 30-year high on Friday, with a 25-basis-point hike to 1.25% from 1.00%, according to AFP (France). The decision was not unanimous, as it was carried by a 7-2 majority vote.
In a memo to clients, Deutsche Bank Research said the upcoming midterms could factor into a potential decision to hold interest rates steady, though in their view the election would not be a 'primary consideration,' according to ABC News (United States).
The Federal Reserve is widely expected to leave interest rates unchanged Wednesday, even after September inflation accelerated to 3.7% and wholesale prices surged more than 6%, according to Thewealthadvisor (United States).
Investors continued to track the US dollar, Treasury yields, and geopolitical developments alongside the Fed decision, according to Livemint (India).
The Federal Reserve's decision is expected to have significant implications for the broader path of US interest rates and inflation pressures, according to Tradingpedia (United States).
The Federal Reserve's fourth rate-hiking cycle of the 21st century looks to be just getting started, according to The Motley Fool (United States).
What's confirmed
- "We could imagine that all else equal the Fed might prefer to stay out of the headlines for raising rates just ahead of a midterm election where affordability is the principal concern," the memo said. 24/7 coverage of breaking news and live events The Federal Reserve is set to issue an interest rate decision on Wednesday as a surge of inflation puts pressure on central bankers to raise rates days before the midterm elections.
What's still developing
- The Relative Strength Index (RSI) around 40 suggests subdued momentum, hinting that any corrective uptick would likely face selling interest into nearby overhead levels.
- “Strong job growth and firmer inflation have tilted the Fed toward a September rate hike, with recent data pushing Treasury yields and mortgage rates to one-year highs,” First American Senior Economist Sam Williamson said.
- Interest rates could rise again across the world – here's why Skyler Weinand, chief investment officer at Regan Capital based in Dallas, said while inflation was in line with expectations, it was "still too hot and the Federal Reserve's hands are tied".
- That leaves Warsh facing a communication problem almost as consequential as the interest-rate decision itself.
- Markets are now pricing a 92 per cent probability that the Fed will raise rates Gold prices are inching upwards on Wednesday as high oil prices continue to fuel inflation concerns and as interest-rate hike bets are near-certain ahead of the Federal Reserve’s policy decision.
- The resurgence of regional hostilities is keeping attention on potential inflation pressures and the broader path of US interest rates, factors that could limit downside for the Greenback.
- The RBA governor, Michele Bullock, said inflation had been too high for most of the last six years but she was confident higher rates would bring it back down.
- Oil prices pulled back but remained elevated ahead of a critical Fed decision on Wednesday, with market expectations shifting towards a prolonged US-Iran conflict.
- Her reporting focuses on helping readers understand complex financial developments through data-driven, research-backed stories that explain how policy changes, market trends and regulatory decisions affect investors and households. <br><br> Before joining Mint, Kirti worked at ET Money, where she specialised in mutual fund research and investment analysis.
- The move marked the first rate increase in three years.
- The rate hike should help cool off inflation by slowing the economy and eating away at demand, though such a policy move typically yields results after a lag time lasting several months.
- "The story really is starting to take shape that it's probably going to take a couple more hikes in 2027, and this higher-for-longer borrowing costs and mortgage rates well above 7% is going to stick around for at least a year, maybe longer," Long said.
Sources
- ABC News - Breaking News, Latest News and Videoslink
- Fox Businesslink
- NBC Newslink
- Norada Real Estate Investmentslink
- The Guardianlink
- The Motley Foollink
- Fxstreetlink
- AFPlink
- Nationalmortgageprofessionallink
- BBClink
- Economictimeslink
- Thewealthadvisorlink
- Gulfnewslink
- Tradingpedialink
- Oilpricelink
- Jpostlink
- moneycontrol — video link