Federal Reserve Watch: Latest Decision, Statements and What Comes Next
October 19, 2026 | ATN Trade & Finance
The Federal Reserve's next meeting is nine days away, and markets have largely decided what they think will happen: a hold. The more consequential question — whether the Fed hikes in December and again in early 2027 — is what October 28 will actually answer.
The Last Decision: September 16 Hike to 3.75–4.00%
At its September 15–16, 2026 meeting, the FOMC voted 12-0 to raise the federal funds rate by a quarter point, bringing the target range to 3.75–4.00%. Chair Kevin Warsh described the move as "a necessary step to remove economic support from a surprisingly strong economy." The Board of Governors also raised the interest on reserve balances to 3.90% and the primary credit rate to 4.00%, both effective September 17.
The minutes, released on October 7, showed an internally divided committee behind the unanimous vote. 16 of 18 officials penciled in at least one more hike for 2026. Governor Michael Barr stated in a September 23 speech that "further policy adjustments are likely to be needed," and Governor Lisa Cook said the September increase "was to address inflation, which has been too high for too long." The hawkish bloc, including Dallas Fed President Lorie Logan, warned that inflation "could still spike." A more patient group of members wanted to pause to assess how prior hikes were working through the economy.
The Inflation Picture
What the Fed is watching is not improving fast enough. Total PCE inflation rose to an estimated 3.8% year-over-year in August; core PCE was 3.4%. September's CPI, released October 14, came in at 3.7% year-over-year — above the 3.6% forecast — with PPI posting its largest monthly gain since March 2022 at +1.3% month-over-month, driven largely by a 20.3% jump in gasoline prices tied to the Hormuz conflict. Inflation has now run above the Fed's 2% target for more than five years. Minutes participants flagged concern that prolonged above-target inflation could begin affecting wage- and price-setting expectations.
What Happens October 28
Markets are currently pricing approximately 84% odds of a hold and about 15% odds of a hike at the October 27–28 meeting. That represents a dramatic shift from September, when hike odds were above 65%, driven in part by two post-meeting data releases that softened the urgency: August PCE came in at 3.00% year-over-year (below the ~3.20% expected), and September payrolls rose by just 29,000 while unemployment edged up to 4.2%. Warsh has moved the Fed away from explicit forward guidance, so the absence of pre-meeting hawkish signals from officials has been read as confirming a pause.
The October meeting will not include updated rate projections — those come in December. So the key signals to watch are any dissents from hold (three officials dissented in favor of a hike at the July 29 meeting) and any language in the statement about the pace of future tightening.
What Comes Next
The December 9 meeting is where the action is. Markets are pricing roughly a 75% chance of a 25-basis-point hike on December 9, which would bring the target range to 4.00–4.25%. Some forecasters see hikes extending into early 2027, potentially pushing short-term rates toward 5%. The November 10 CPI print is the most important single data release between now and December — if inflation re-accelerates, December becomes a near-certainty.
What this means: The Fed is in a data-dependent pause with a clear bias to tighten further. October 28 is unlikely to move markets on the rate decision itself; what will matter is the statement language and whether any members dissent. December is live, and the November CPI print — not the October meeting — is the real pivot point for the rate outlook.
Sources:
- FOMC Minutes, September 15-16, 2026 — Federal Reserve
- What to Look For From the Fed's October Meeting — Forbes
- What to Expect From Interest Rates for the Rest of 2026 — Forbes
- FOMC Minutes Breakdown: Fed Divided Over Future Rate Hikes — Raisin
- Fed Meeting October 2026: Warsh Hold Talk vs What the Fed Said — Vantage Markets
- Fed Rate Odds Today: 84% Hold, 15% Hike at the Oct 28 FOMC — Prediction Markets Picks
- Markets Brace For Two More Fed Rate Hikes in 2026 — Forbes