Fed decision in Oct 2026?

The most important fact is that the September meeting already delivered a 25 bps hike, and the Fed’s own minutes suggested some participants expected another increase before year-end without committing to October specifically. Since then, the tone has shifted toward patience: recent labor softness and cooler inflation prints have made a back-to-back October hike look less likely, while several Fed officials have sounded comfortable waiting for more data before acting again. That combination usually favors a hold, especially when policymakers want to avoid over-tightening after an earlier move only weeks before.

The structure of the decision also matters. A 0 bps move is the default when the Committee wants to preserve optionality, and October is often used as a meeting where the Fed can pause and reassess before December. The recent commentary cited in the news summary points in that direction, and the distribution of alternative outcomes suggests the market sees the real binary as hold versus a 25 bps hike, not as a meaningful chance of easing. If the Fed were going to resume tightening immediately, the language from officials would likely have been firmer and more coordinated than what is described here.

Compared with the current market price of 86% for no change, my estimate is slightly higher at 89%. That is not a dramatic mispricing, but I do think the market still leaves a bit too much weight on the possibility of an October follow-up hike given the recent shift in data and Fed communication. The market’s 16% assigned to a 25 bps hike looks a little rich unless upcoming inflation or labor reports materially re-accelerate before the meeting.