Fed decisions (Sep–Dec)

The September meeting has already delivered the first leg of the sequence, which removes the biggest source of uncertainty. The real question is whether the Fed pauses in October and then resumes tightening in December. Recent coverage suggests that is close to the market’s working assumption: October hike odds have been pushed down sharply, while December is still widely seen as live for another increase if inflation does not cool enough. That pattern is broadly compatible with Hike–Pause–Hike, because a pause in October can serve as a short wait-and-see step before a year-end move.

The strongest argument against a Yes outcome is that the sequence requires two things to happen in order, and the second step is still vulnerable to new data. If inflation eases more than expected, the Fed could pause in both October and December, producing Pause–Pause instead of Hike–Pause–Hike. If inflation or labor data re-accelerate, the Fed could hike in October as well, which would also break the exact pattern. So even though the market seems to favor a pause in October and a possible December hike, the exact combination still depends on data arriving between meetings, especially the inflation prints and any labor-market surprises.

Compared with the market-implied probability around 60%, my read is slightly lower but still close. The current setup favors the broad shape of the sequence because the September hike is done, October hike odds look low, and December remains meaningfully open. However, December is not yet a sure thing, and the market can quickly reprice if upcoming inflation data softens or if growth and labor conditions weaken further. That keeps the probability of the exact Hike–Pause–Hike path in the high-50s rather than the mid-60s or above.