U.S. Federal Reserve Expected To Hold Interest Rates Steady

What happened

The U.S. Federal Reserve is widely expected to hold interest rates steady at its policy meeting later today (Oct. 28). Markets price a 93% chance the federal funds rate stays at 3.75% to 4%.

Confirmed

Global impact / market context

A pause keeps borrowing costs for mortgages, business loans and credit cards near current levels for now. Markets still expect a December rate increase, so households and companies may face higher costs later this year.

Analyst inference

Investors are weighing a Fed pause against a likely December increase and a possible Bank of Canada move to 2.50%. Inflation at 3.7% in September keeps pressure on policymakers, and the timing near midterm elections adds political attention.

Analyst inference

What to watch

1. The Fed's policy statement later today will show whether rates stay at 3.75% to 4%, as markets expect with a 93% chance, and whether it signals a December move. Confirmed
2. Watch whether the Fed hints at a 25-basis-point increase on Dec. 9, which futures traders put at 87% odds; such a signal would guide borrowing cost expectations. Proposed
3. Track the Bank of Canada's decision on Oct. 28, expected to raise its key rate to 2.50%, because a move there could shape investor views on rate paths beyond the U.S. Analyst inference

Evidence

• baystreet.ca