Three numbers drive the week: inflation of 3.7% above forecasts, a rate range between 3.75% and 4%, and a 10-year yield near 5.1%.

Topic: US Federal Reserve decisionCategory: Fundamental analysis, macroDate: 22 October 2026

• 3.7%Annual inflation in September versus 3.6% expected
• 94 of 100Economists in the Reuters poll expect rates to hold in October
• 100 of 100Expect a hike in December

Key facts

• The decision: Wednesday 28 October, usually at 2:00 pm New York time, which is 9:00 pm Cairo time (allowing for the daylight saving change)
• The last move: a 25 basis point hike on 16 September to a range between 3.75% and 4%, the first hike since 2023 and a unanimous vote
• Core inflation: 2.6% annually and 0.3% monthly in September
• Fed Chair Kevin Warsh declined on 16 October to preview the meeting's decision

What has changed since September?

The 14 October inflation reading lifted the chance of an October hike from about 22% to between 41% and 54%, depending on the source, driven by a 9.1% jump in gasoline. The odds then eased after signals from John Williams, Philip Jefferson and Christopher Waller that the Fed can wait. Prediction markets recorded a record 87% chance of a hold on 16 October.

Why a hold is the base case

• Wanting more data: Officials prefer not to hike at two consecutive meetings before reviewing new data.
• Political sensitivity: Midterm elections take place in early November, and UBS said a hike on the eve of the vote is politically untenable.
• Signals from officials: Warsh spoke of focusing on the trend rather than single data points and gave no hint on the October decision.

Why December is the focus

The Fed's September projections showed a strong majority of officials expecting at least one more hike before year end. Inflation is energy-driven but has spread to underlying prices, with core inflation at 0.3% monthly. The chance of a December hike stood near 74% in prediction-market readings on 30 September.

Why the market moves

• Dollar and yields: The 10-year yield is near 5.1% versus 3.97% before the war with Iran, and the dollar index is at or above 102.95 according to Mitrade.
• Gold: Near $4,120 after four sessions of losses, since higher rates raise the cost of holding it.
• Equities: The S&P 500 closed at 7,757.17 on 21 October, about 1.1% below its 52-week high of 7,844.52, and the Nasdaq at 26,702.86.
• Bitcoin: Roughly between $82,000 and $84,500, with key support near $80,000 according to Glassnode.

Decision scenarios

▲ Bullish scenario

A hold with balanced language that does not commit to a December hike: it eases pressure from yields and the dollar and supports equities, gold and Bitcoin.

▼ Bearish scenario

A hold with a clear signal of a near-term hike, or a surprise hike (prediction markets put it near 14% on 16 October): it lifts the dollar and yields and pressures gold, tech stocks and Bitcoin.

Reference levels

“The real question is not whether the Fed hikes in October, but what it says about December.”

Watchlist

• Thursday 22 October: weekly jobless claims (expected near 200,000)
• The 10-year yield around 5.1% and dollar moves
• Brent above $110 and its effect on inflation expectations
• Wednesday 28 October: the Fed statement and Warsh's press conference
• Big-company earnings and AI stocks

What it means for traders

• Fed decisions move the dollar, gold and indices together, so check how your assets correlate before opening more than one position.
• The event is usually preceded by calm and followed by a sharp widening of ranges, and spreads can widen at the announcement.
• Reduce position size and set a stop loss before the announcement.
• Leverage multiplies profits and losses alike.