Wednesday, 28 October 2026 | 2:00 p.m. ET 🗓️
🔎 What’s happening?
The Federal Reserve announces its latest interest rate decision after its October 27-28 meeting. Following September’s rate hike, policymakers face a difficult balance: inflation remains stubbornly high, while higher borrowing costs risk slowing economic activity.
Markets currently assign an 88.4% probability to rates remaining unchanged and an 11.6% probability of another 0.25 percentage-point hike. The current target range is 3.75%-4.00%.
⚖️ The two scenarios
🟢 Scenario 1: The Fed holds rates
The target range remains at 3.75%-4.00%.
- Equities: could benefit if investors interpret the pause as a sign that policymakers want more time to assess the economy.
- U.S. dollar: could weaken if the statement sounds less hawkish than expected.
- Gold: could recover if Treasury yields and the dollar decline.
However, a hold alone may not reassure markets if Chair Kevin Warsh signals that a December hike remains likely.
🔴 Scenario 2: The Fed raises rates
The target range rises to 4.00%-4.25%.
- Equities: could face pressure as borrowing costs and valuation concerns increase.
- U.S. dollar: could strengthen as markets reassess the outlook for U.S. interest rates.
- Gold: could come under pressure from higher yields and a stronger dollar.
An unexpected hike could trigger a sharper market reaction because the prevailing expectation is for the Fed to hold.
👀 What matters most?
The decision is only part of the story. Investors will closely examine the accompanying statement and the press conference for clues about the December meeting.
With energy prices adding to inflation concerns, the Fed’s assessment of price pressures will be crucial. September inflation data strengthened the case for further tightening, although policymakers have signalled a preference for patience.
💡 The big takeaway
The real question is not just whether the Fed holds on Wednesday, but whether December brings another hike.
A pause could offer markets temporary relief, but persistent inflation may keep financial conditions tight. Watch the Fed’s language carefully: its forward guidance could matter more than the headline decision itself.
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