Fed Expected to Pause Rate Hikes at October Meeting Despite Sticky Inflation

Federal Reserve officials are widely expected to hold the benchmark interest rate steady at 3.75% to 4% at the conclusion of their two-day meeting Oct. 28, according to CME FedWatch and a Reuters poll in which 94 of 100 economists forecast a pause. All 100 surveyed expect a quarter-point increase in December. Consumer prices rose 3.7% in September from a year earlier, up from 3.4% in August and well above the Fed's 2% target. Policymakers have signaled concern that inflation is becoming entrenched. "With each passing month, persistently elevated inflation raises the risks of an inflationary mindset becoming entrenched in the economy," Cleveland Fed President Beth Hammack said Oct. 12. Fed Chair Kevin Warsh reaffirmed his commitment to price stability during an Oct. 16 event in Bangkok. The war in Iran remains a key uncertainty for energy prices and inflation, with President Donald Trump suggesting strikes could resume after the midterms.