The Federal Reserve raised interest rates in September, its first move of this kind since 2023, and attention has now shifted to the September Consumer Price Index data due Wednesday. This will be the final inflation reading before the Fed’s October 28 decision. Markets are currently pricing in roughly an 82% chance that interest rates will remain unchanged in October, implying an 18% chance of an increase.
At its September meeting, the benchmark interest rate was raised by 25 basis points to a range of 3.75%–4.00%. This was the first increase since 2023. Meeting minutes indicate that most officials considered another increase before the end of the year appropriate; however, that does not necessarily mean October is the target month. The minutes reaffirm a “data-dependent” approach and offer no clear guidance on the October meeting.
The September Consumer Price Index data, due Wednesday, will help clarify this uncertainty. Market forecasts point to headline inflation rising from 3.4% to a range of 3.6%–3.7% year over year. This increase is expected to be largely driven by higher energy prices. Meanwhile, core inflation is expected to remain more moderate, in line with expectations that the Fed will leave interest rates unchanged in October.
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At its September meeting, the benchmark interest rate was raised by 25 basis points to a range of 3.75%–4.00%. This was the first increase since 2023. Meeting minutes indicate that most officials considered another increase before the end of the year appropriate; however, that does not necessarily mean October is the target month. The minutes reaffirm a “data-dependent” approach and offer no clear guidance on the October meeting.
The September Consumer Price Index data, due Wednesday, will help clarify this uncertainty. Market forecasts point to headline inflation rising from 3.4% to a range of 3.6%–3.7% year over year. This increase is expected to be largely driven by higher energy prices. Meanwhile, core inflation is expected to remain more moderate, in line with expectations that the Fed will leave interest rates unchanged in October.
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