The Federal Reserve raised interest rates in September for the first time since 2023, and its next decision lands on October 28. Inflation reached 3.7% in September, yet hike odds fell sharply in the days after. Here is where rates stand, what the odds say, the case for a hike anyway, and what to do either way.

The short answer

Markets expect the Fed to hold rates at 3.75% to 4.00% on October 28, 2026. Prediction markets and CME's FedWatch tool priced a hold at about 84% and a hike at about 15% to 17% on October 19 to 21, down from about 47% after hot September inflation. A hike is still possible, and December 9 is the meeting markets favor for the next increase, at roughly 88% to 90%.

Where do interest rates stand before the October 2026 Fed meeting?

The federal funds rate target is 3.75% to 4.00%. The Federal Open Market Committee raised it a quarter point on September 16 in a 12 to 0 vote, its first increase since July 2023, according to the Fed's statement, which said the move "will support a timelier return to the Committee's 2 percent goal." The Fed's September minutes said most participants expect another increase by year end, without naming a date. The next meeting is October 27 and 28. According to the Fed's 2026 calendar, it comes without new economic projections, which are published only at the March, June, September, and December meetings. See the full September decision tracker for how the odds got here.

What are the odds the Fed raises rates on October 28?

Roughly 15% to 17% as of October 21, with a hold near 84%, according to prediction markets and CME's FedWatch tool. These odds have swung more than most investors expect:

  1. September 24: 73.5% for a hike, after a strong business activity report and a hawkish speech from Fed governor Michael Barr.
  2. October 2: about 17%, after September payrolls rose only 29,000.
  3. October 14: about 47% to 50%, up from about 22%, after September inflation came in at 3.7%.
  4. October 16: below 15%, after Fed chair Kevin Warsh said "I don't prejudge meetings" and gave no signal, according to Yahoo Finance.
  5. October 19 to 21: about 15% to 17%, with CME FedWatch showing a hold near 84% as the 10-year yield held near 5.1% and oil prices eased from last week's highs.

The Fed entered its pre-meeting blackout on October 17, so no officials are scheduled to speak before the decision. Odds can still move on news, and they do so quickly.

Why do markets expect a hold in October?

Three pieces of evidence point to a pause. First, hiring slowed sharply. The Bureau of Labor Statistics reported 29,000 jobs added in September, with July revised down to a loss of 10,000, and unemployment at 4.2%. Second, core inflation is running well below the headline rate. Core CPI, which excludes food and energy, was 2.6% over twelve months in September, according to the BLS, a tenth above forecasts but far from the 3.7% headline. Third, officials have signaled patience. Vice Chair Philip Jefferson, New York Fed President John Williams, and governor Christopher Waller have said the Fed could wait, and Waller noted that hikes need not come at consecutive meetings. Goldman Sachs, as summarized by SimpleVisor, expects a pause in October and a final hike in December.

The honest counterargument: could the Fed raise rates in October anyway?

Yes, and the case is stronger than a 15% price suggests. Inflation rose to 3.7% in September from 3.4% in August, the fastest pace in five months, with gasoline up 9.1% in the month and shelter up 3.2% over twelve months. Reporting on the CPI release says price pressure is spreading from energy into services. The 10-year Treasury yield closed at 5.09% on October 16, per the Fed's daily data, so bond markets are not signaling relief. Warsh has also surprised before: he hiked in September despite public pressure from the White House, and three officials, Beth Hammack, Neel Kashkari, and Lorie Logan, voted for a hike in July. Silence from Warsh left the door open.

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Odds are a snapshot. October hike odds have been 73.5%, 17%, 47%, and 15% to 17% within four weeks. The Fed also decides before it sees September's PCE inflation report and the third-quarter GDP estimate, both scheduled for October 29 on the Bureau of Economic Analysis calendar. An 84% hold is the market's best read on October 21, and it can change before October 28.

The fair resolution: a hold is the base case because the labor data is weak and core inflation is moderate, while a hike remains a live minority outcome because headline inflation is rising and the chair has shown he will act. Neither result changes a long-term plan.

What happens after the October 28 decision?

October 29: PCE inflation and GDP
The BEA is scheduled to release September's PCE price index, the Fed's preferred inflation gauge, and the first estimate of third-quarter GDP. August PCE inflation was 3.4%, with core at 3.0%. See why the Fed uses PCE and not CPI.
November 6: the October jobs report
The BLS has scheduled October's employment report for November 6. After a 29,000-job September, a rebound or another weak month would shift December odds.
December 8 to 9: the next decision, with new projections
Markets favor a hike here, with CME FedWatch near 88% on October 21 and some readings near 90%. This meeting brings a new dot plot. See what the Fed dot plot is.

What a beginner should actually do

  1. Keep contributions on schedule. A hold, a hike, and a surprise have all happened to this market within a month. See time in the market beats timing the market for why a fixed schedule has outperformed trading around meetings.
  2. Check where your cash sits. At a 3.75% to 4.00% policy rate, a near-zero checking balance is a real cost. See where to keep cash when rates are high.
  3. Know your variable-rate debt. Credit cards and HELOCs reprice within a billing cycle or two of a hike. Fixed-rate loans do not change until refinanced.
  4. Understand bond price risk before adding bonds. A hike or a hot report can push yields up and bond fund prices down. See should beginners buy bonds now.
  5. Read reactions as one day of data. Stocks fell on September 16 and recovered most of it the next session. See why stocks fell after the Fed raised rates.
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The actionable takeaway: markets expect a hold on October 28, with about a 15% chance of a hike, and the Fed itself has said only that another increase is likely by year end. Decide your cash, debt, and contribution plan today, using the current 3.75% to 4.00% rate, and the decision becomes a headline to read and not a trigger to act.

The quick version

  • The Fed raised its rate to 3.75% to 4.00% on September 16, 2026, its first hike since 2023, and meets again October 27 and 28
  • Prediction markets priced a hold at about 84% and a hike at about 15% to 17% on October 19 to 21
  • October hike odds went from 73.5% on September 24 to about 17% on October 2, about 47% to 50% on October 14, below 15% on October 16, and about 15% to 17% on October 19 to 21
  • The case for a hold: 29,000 September jobs, core CPI at 2.6%, and officials signaling patience
  • The case for a hike: CPI at 3.7%, a 10-year yield above 5%, and a chair who hiked despite pressure
  • September PCE and third-quarter GDP arrive October 29, the day after the decision, and the next meeting with projections is December 8 and 9
  • Cash, debt, and contribution plans can be set today and do not depend on the October result

The Fed decides on incomplete data every time, and so does everyone forecasting it. A plan built before the meeting does not need the answer.