The Federal Open Market Committee meets October 27-29 against an awkward backdrop: inflation is rising, key economic reports are missing, and the bond market has already done some of the Fed's work for it.
The September consumer price index, released October 14, showed the annual inflation rate rising to 3.7%; the last major consumer snapshot before the midterms. August's 3.4% reading had already kept the hawks on the committee restless, and the follow-up report removed any doubt that the price pressures from the war in Iran and tariff schedule are proving persistent.
Why a Skip Is the Base Case
A Reuters poll of economists taken ahead of the meeting expects the committee to hold steady after September's hike to 3.75-4.00%, absorbing the data blackout caused by the government shutdown that began October 1. The same poll still forecasts another increase in December, once price and labor data resumes flowing.
Fed Governor Christopher Waller and other officials have said the shutdown's information loss argues for extra caution. Private payroll and spending trackers have partially filled the gap, but they cannot replace official wage and CPI releases.
The Market Picture
The 10-year Treasury yield remains above 5%, and equities have been whipsawed by war headlines and election polling alike. A skip would let the Fed re-anchor with real data before December; a surprise hike would signal that Warsh views the 3.7% CPI print as the new floor to fight.
Either way, the committee's September pivot is holding. The only question left is pace.
