Yes, technically they can increase interest rates, but the probability is extremely low (~10%) for today's meeting.

1. The Likelihood Breakdown

Hold Rates Steady (90% Odds): The Federal Reserve is overwhelmingly expected to pause and maintain the federal funds rate at 3.75%–4.00% today.

Surprise Rate Hike (10% Odds): A surprise 25 bps hike today (lifting rates to 4.00%–4.25%) is considered an unlikely scenario.

2. What Happens If They Do Surprise with a Rate Hike Today?

If the Fed delivers an unexpected 25 bps rate hike today:

Gold (XAU/USD): Will experience a sharp, aggressive sell-off / dump as bond yields and the US Dollar surge instantly.

US Dollar (USD): Will rally strongly across all forex pairs.

3. Why They Are More Likely to Pause Today and Hike in December

Following September's rate increase, central bank officials have favored observing upcoming economic data before making their next move.

Today's Meeting (October): Pausing allows the Fed to evaluate incoming inflation and employment figures.

Next Meeting (December): Markets and Fed futures currently price in a ~73% probability of a rate hike in December to address elevated core inflation.