Fed Expected to Hold Rates at 3.75%-4% as Inflation Runs Hot

The Federal Reserve is expected to leave its benchmark interest rate unchanged at 3.75% to 4% on Wednesday, pausing after its first hike in three years, even as inflation remains well above target. The rate decision is scheduled for 2 p.m. ET. Consumer prices rose at a 3.7% annual rate in September, driven largely by gasoline prices above $4 a gallon, which accounted for more than half the monthly increase, according to the Labor Department. Core inflation, excluding energy, rose 2.6% from a year ago. The Fed targets 2% annual inflation. CME Group's FedWatch tool shows traders pricing an 88% probability of a hold in October and a 71% probability of a rate increase at the Dec. 8-9 meeting. In September, the Fed raised the federal funds rate by a quarter percentage point. New York Fed President John Williams said the September action left "no need for urgency." Chairman Kevin Warsh, who opposes forward guidance, will hold a press conference after the decision.