The hawkish September FOMC meeting, where the Fed raised the federal funds rate 25 basis points to the 3.75-4.00% range and released projections showing most officials favoring at least one additional increase by year-end, has positioned a further 25 bp hike as the leading outcome for the October 27-28 decision. Persistent inflation near 3.6-3.7% on a 12-month PCE basis, combined with resilient growth and a stable labor market at around 4.1% unemployment, has shifted trader consensus toward tighter policy to achieve a timelier return to the 2% target. This dynamic supports the 54.5% implied probability of a 25 bp October increase versus 44.5% for no change, with upcoming data releases and the mid-October inflation prints serving as key swing factors before the next meeting.

Sep 20 2026

Market pricing shifts sharply toward 25 bps increase ahead of October FOMC meeting

25 bps increase surges to 56%18%

Following the September FOMC meeting and updated projections, market prices for a 25 basis point increase in October surged from 38% to 56%, while the no change option dropped from 63% to 44%, reflecting growing consensus on a moderate rate hike at the October meeting.

Sep 17 2026

Markets react to Fed's hawkish September rate hike

25 bps increase surges to 53%15%

Following the September rate hike, markets adjusted expectations, with the probability of a 25 bps increase in October rising sharply, reflecting confidence in continued Fed tightening to combat inflation.

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