Fed heads into October meeting after first rate hike since 2023

The Federal Reserve's policy committee meets on October 27 and 28, six weeks after it raised interest rates for the first time since July 2023. On September 16 the Federal Open Market Committee lifted the target range for the federal funds rate by a quarter of a percentage point to 3-3/4 to 4 percent, from 3-1/2 to 3-3/4 percent. The decision was unanimous, with all 12 voting members in favor.

In its statement, the committee said economic activity "is expanding at a solid pace" and that "inflation remains elevated." It described domestic spending as resilient despite uncertainty linked partly to geopolitical developments, and said the increase would "support a timelier return" to its 2 percent inflation goal.

Data published since then has kept inflation in focus. The Bureau of Labor Statistics reported on October 14 that consumer prices rose 3.7 percent in the 12 months to September, with energy prices up 20.4 percent over the year, while core inflation, which excludes food and energy, stood at 2.6 percent. Oil prices above 100 dollars a barrel have added to that pressure.

Futures markets price no change in rates at the October meeting, according to CaixaBank Research's daily report of October 20. The October meeting is not accompanied by a Summary of Economic Projections; the next set of projections is due with the December 8 to 9 meeting, according to the Fed's published calendar.

The September statement was released at 2:00 p.m. Eastern time, the Fed's usual schedule, and the October decision is due on October 28. Investors will watch whether the statement keeps describing inflation as elevated and whether it signals that further increases remain possible.