Fed Rate Decision Preview: Will the Fed Pause Before December?

The Federal Reserve announces its next rate decision at 18:00 UTC on Wednesday 28 October, six weeks after raising rates for the first time since 2023. Markets widely expect a hold at 4.00%, so the bigger question for the dollar, gold and EUR/USD is what the Fed signals about a further rise in December, with oil holding above $100 a barrel and keeping inflation risks in focus.

Fed rate decision in brief

• The Fed announces its rate decision at 18:00 UTC on Wednesday 28 October, followed by Chair Kevin Warsh's press conference at 18:30 UTC.
• Markets widely expect the target range to stay at 3.75%–4.00%. CME FedWatch data showed around a 10% chance of an October hike on 26 October, while a rise by December was largely priced in.
• September data sent mixed signals: the US economy added just 29,000 jobs, but consumer prices rose 3.7% from a year earlier, driven by fuel and food.
• Brent crude has held above $100 a barrel, trading broadly between $100 and $110 in the second half of October amid tensions between the United States and Iran.
• Gold has slipped to around $4,000, the lower end of a broad 3900_4,250 range, while EUR/USD is trading sideways around 1.1200. US PCE inflation, GDP and the ECB decision all follow on 29 October.

What is the Fed rate decision and when is it announced?

The Federal Open Market Committee (FOMC) sets the federal funds rate, the interest rate banks charge each other for overnight loans. Changes to it ripple through borrowing costs, bond yields and the value of the US dollar, which is why the Fed rate decision is one of the most closely watched events for currency, gold and stock-index traders.

The October meeting runs on 27–28 October. The policy statement is due at 18:00 UTC on Wednesday 28 October, as shown on our economic calendar, followed by the press conference at 18:30 UTC. Unlike September, this meeting does not include new economic projections or a dot plot, so the statement wording and the Chair's comments are likely to carry more weight.

What markets expect from the October Fed meeting

Nearly all economists surveyed by Reuters expect the Fed to keep rates unchanged this month and to raise them in December. Market pricing points the same way: CME FedWatch data showed about a 10% chance of an October hike on 26 October, down from around 42% immediately after the September inflation report.

The Fed's September projections already pointed to one more quarter-point rise this year, with a median year-end federal funds rate of 4.1%. Nine of the eighteen participants pencilled in at least one further increase in 2026. The question is less whether the Fed keeps that bias, and more how firmly it signals it.

Why this Fed rate decision matters after the September hike

The Fed raised its target range by a quarter point to 3.75%–4.00% on 16 September in a unanimous 12–0 vote, its first increase since July 2023. Since then, the data have pulled in two directions.

On the labour side, payrolls rose by only 29,000 in September, well below forecasts of around 90,000, and unemployment edged up to 4.2%. On inflation, the consumer price index rose 0.6% on the month and 3.7% from a year earlier, slightly above the 3.6% forecast, while core inflation, which excludes food and energy, rose 2.6%. The Fed's preferred measure, PCE inflation, stood at 3.4% in August, with core PCE at 3.0%.

In simple terms: weak hiring argues for patience, but inflation well above the Fed's 2% target argues for keeping the door open to another rise. Our NFP preview covers the September jobs data in more detail, and our September Fed preview explains the background to the last rate rise.

How oil prices are feeding US inflation

Energy is the main reason headline inflation has climbed faster than core inflation. Higher gasoline, diesel and food prices drove September's CPI increase, and oil has stayed elevated since. Brent crude has held above $100 a barrel, trading broadly between $100 and $110 in the second half of October, as tensions between the United States and Iran, including disruption around the Strait of Hormuz, and an attack on the headquarters of Saudi Arabia's state oil company kept supply risks in focus.

The Fed cannot lower oil prices with interest rates, but it watches closely whether energy costs spread into wages, services and inflation expectations. If they do, the case for another rise strengthens. If oil eases, pressure on the Fed could fade. That is why the Chair's view on energy may matter as much as the decision itself.

Slowing jobs, rising inflation: the Fed’s dilemma

Four things to watch on 28 October

1. The decision and the vote

A hold is widely expected. Any dissent in favour of a hike would show how strong the hawkish camp remains. Three officials voted for a rise as early as July, before the Fed acted in September.

2. The statement wording

Language that keeps further tightening on the table would support December hike expectations. Softer wording on inflation risks, or more emphasis on the slowing labour market, would weaken them.

3. Chair Warsh's press conference

Comments on December, on the weak September jobs report and on oil-driven inflation could move markets more than the decision itself, especially as there are no new projections at this meeting.

4. Two-year yields and the dollar

Two-year Treasury yields are the most direct gauge of how markets reprice the Fed's path. A sustained move in yields after the press conference is often a clearer signal than the first reaction at 18:00 UTC. The next day's PCE and GDP data, both at 12:30 UTC on 29 October, could then confirm or challenge that first reading.

How the Fed rate decision could move gold

Gold has struggled as rising oil prices lifted inflation fears and rate-hike expectations. After trading mostly in a $4,100 - 4,250 area from late September to mid-October, it slipped to around $4,000 in the third week of October, its lowest level in the period shown.

Gold has been trading in a broad $3,900 - 4,250 range. Reference levels traders are watching:

• 4,200: the top of the late-September and October range
• $4,100: the former range floor, now the first resistance area
• $4,000: the round-number level now being tested
• $3,941: the low of the year so far
• $3,924 and $3,750: further support areas below

A more hawkish outcome could lift yields and the dollar, adding pressure on gold toward $3,941 and $3,924. A more dovish outcome could support a rebound toward $4,100 and $4,200. Geopolitical demand can override that usual relationship.

Gold is trading around $4,000 as rate-hike bets build

Source: TIOmarkets MT5, XAUUSD H4 chart, 26 October 2026.

How the Fed rate decision could move EUR/USD

EUR/USD fell from around 1.1425 in late September to the 1.1300 area at the start of October, and has since traded sideways between roughly 1.1110 and 1.1300, around 1.1200 at the time of writing. The European Central Bank raised its deposit rate to 2.50% in September, but the Fed's tighter stance and higher US yields have kept the euro under pressure.

The pair also faces a second central-bank event: the ECB announces its own decision at 13:15 UTC on Thursday 29 October, with its deposit rate expected to stay at 2.50%, followed by a press conference at 13:45 UTC. That means two policy decisions in less than 24 hours.

EUR/USD has been trading in a broad 1.1100–1.1300 range. Reference levels traders are watching:

• 1.1425: the late-September resistance area
• 1.1300: the top of the current range
• 1.1200: the middle of the range
• 1.1111: the October low area
• 1.1061: the next support below

A more hawkish Fed could push EUR/USD toward 1.1111 and 1.1061. A more dovish outcome could lift it toward 1.1300 and possibly 1.1425, with the ECB's tone the following day able to reinforce or reverse the move.

All levels are context markers, not entry or exit points, and should be checked against a live price feed.

EUR/USD holds its October range before the Fed

Source: TIOmarkets MT5, EURUSD H4 chart, 26 October 2026.

Three scenarios: better than expected, as expected or worse than expected

In this table, "better" means a softer, more dovish outcome than markets expect, and "worse" means a tighter, more hawkish one, from the perspective of borrowing costs. A more hawkish outcome tends to support the US dollar.

Scenario thresholds are editorial guideposts, not forecasts or trading recommendations.

A mixed message may create the hardest reaction

The most difficult outcome is a split signal, such as a hold with dissents in favour of a hike, or hawkish wording paired with a cautious press conference. In that case, the first move in the dollar or yields may reverse as traders weigh the statement against the Chair's comments. Liquidity can thin around 18:00 UTC, which can widen spreads and cause slippage.

Key events to watch

• Tuesday 27 October: the two-day FOMC meeting begins
• Wednesday 28 October, 18:00 UTC: Fed rate decision and policy statement
• Wednesday 28 October, 18:30 UTC: Chair Warsh's press conference
• Thursday 29 October, 12:30 UTC: September PCE inflation, with core PCE expected at 3.1% year on year from 3.0% and 0.3% on the month, and the first estimate of third-quarter GDP, expected at 3.2% annualised from 2.2%
• Thursday 29 October, 13:15 UTC: ECB rate decision, with the deposit rate expected at 2.50%, followed by the press conference at 13:45 UTC
• Tuesday 3 November: US midterm elections
• Friday 6 November, 13:30 UTC: October jobs report, the first after the US clock change on 1 November
• Wednesday 9 December: the next Fed rate decision

Risks and uncertainties

Market pricing can shift quickly before the meeting, and a decision that matches expectations can still move markets if the statement or press conference surprises. With PCE inflation, GDP and the ECB decision all due the next day, the first reaction to the Fed may not last. Oil prices remain highly sensitive to developments in the Middle East, and a sudden move in energy could change the inflation outlook within days. Political pressure on the Fed ahead of the midterm elections adds another source of uncertainty.

Market direction is not mechanical. Positioning, liquidity and global risk sentiment can outweigh the usual relationship between Fed signals and individual assets, and prices can gap or reverse rapidly around the announcement.

Conclusion

A hold on 28 October is widely expected, so the real test of this Fed rate decision lies in the signal for December. With inflation at 3.7%, oil holding above $100 and job growth slowing sharply, the Fed is balancing two opposing risks. A firm hint at another rise could extend the dollar's strength and keep pressure on gold around $4,000, while a more patient tone could support a rebound in gold and EUR/USD. The PCE, GDP and ECB events on 29 October, followed by the October jobs report, will then shape expectations for the December meeting.