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Economy

Federal Reserve expected to hold interest rates steady ahead of midterm elections

The Federal Reserve is expected to leave its benchmark rate in the 3.75%-4.00% range on Wednesday, with markets focused on whether officials signal more increases later this year as inflation stays above target.

By admin Oct. 28, 2026 · 6:42 AM ET 2 min read

A white stone neoclassical central bank building with tall columns on a quiet Washington street
A white stone neoclassical central bank building with tall columns on a quiet Washington street

The Federal Reserve is expected to hold interest rates steady on Wednesday, less than a week before midterm elections in which the cost of living is a central issue, according to Reuters.

A white stone neoclassical central bank building with tall columns on a quiet Washington street
A white stone neoclassical central bank building with tall columns on a quiet Washington street

The central bank’s policy decision is due at 2 p.m. EDT. The CME Group’s FedWatch tool put the probability of a hold at about 90%, Reuters reported. Holding the benchmark rate in its current 3.75%-4.00% range would move the discussion past the November 3 elections, which will decide whether President Donald Trump’s Republican Party keeps control of Congress.

An empty press briefing room with rows of blue chairs facing a wooden podium
An empty press briefing room with rows of blue chairs facing a wooden podium

Fed officials had signaled they could be patient after raising rates by a quarter of a percentage point last month. Fed Chair Kevin Warsh is scheduled to hold a press conference at 2:30 p.m. EDT, where he is likely to face questions about why a pause was appropriate when inflation remains above the central bank’s 2% target.

Inflation still above target

The Fed’s 2% target is measured by the Personal Consumption Expenditures Price Index. Initial estimates show the headline reading for that index, as well as related measures, rose in September and remain at 3% or higher on an annualized basis, Reuters reported. The September PCE report is due on Thursday, a day after the meeting ends.

Pedestrians walking on a street lined with tall office buildings in a US financial district
Pedestrians walking on a street lined with tall office buildings in a US financial district

Reuters reported that economists and many Fed policymakers now see prices pushed higher by the lingering energy cost shock, the effects of tariffs, strong demand from the artificial intelligence industry and healthy consumer spending. The global benchmark oil price has risen to around $114 a barrel, up about 20% since the start of September, and prices for diesel fuel are near record highs.

Investors think a rate hike in December is likely, NPR reported. Derek Tang, an economist at Monetary Policy Analytics, wrote ahead of the meeting that his firm now sees the Fed approving three more quarter-percentage-point increases, in line with market expectations of quarterly hikes through June 2027.

What to watch in the statement

Tall stone columns and steps of a government building in Washington against a pale sky
Tall stone columns and steps of a government building in Washington against a pale sky

Markets will watch for any sign of how many more increases could follow. Dario Perkins, managing director for global macro at TS Lombard, wrote that the question now is less whether the Fed will hike again than how many more hikes are to follow, and that Warsh will need to reconcile a hold with his August 28 promise to return inflation to 2% at sufficient speed.

Reporting based on coverage by Reuters and NPR.

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