Fed Expected to Hold Rates This Week Despite Firmer Inflation, WSJ's Timiraos Says

The Federal Reserve is expected to keep its benchmark rate unchanged at its meeting this week even after September consumer and producer price data came in above expectations, WSJ reporter Nick Timiraos wrote Monday. Markets have cut the odds of an October hike to about 15%, and a surprise move would land less than a week before the U.S. midterm elections. The Fed's preferred inflation gauge may now show progress toward its 2% target stalled since early 2025, leaving officials with communication that does not match the data. Chair Kevin Warsh said on October 16, ahead of the pre-meeting blackout, that the economy was "broadly consistent" with officials' September projections, without addressing the inflation reports. The current target range is 3.75% to 4%. Some economists argue waiting six weeks risks falling behind, while former Dallas Fed President Robert Kaplan said holding steady is the path of least resistance. Ten-year Treasury yields touched 5.3%, a 24-year high, before falling 19 basis points to 4.95% on Thursday.