The Federal Open Market Committee meets October 27-28, six weeks after it raised interest rates for the first time since 2023. With the September Consumer Price Index showing a 3.7% annual rate, attention has turned to whether policymakers will pause or keep tightening. Market-implied probabilities offer one window into expectations, although they are not forecasts from the Fed itself and different sources can differ.
Where policy stands
At its September meeting, the Fed raised the federal funds target range by a quarter point to 3.75% to 4.00%, according to the Federal Reserve’s statement. The vote was 12-0. The statement said that “inflation remains elevated” and that the action “will support a timelier return to the Committee’s 2 percent goal.”
That language is useful context. It describes the September move as a step toward bringing inflation back to target faster, and it leaves open how much further the committee will go. The Fed has said it makes decisions meeting by meeting based on incoming data.
What markets are pricing
As of the morning of October 17, the DeFiRate aggregator, which averages last-traded prices on the prediction markets Kalshi and Polymarket, showed roughly the following odds for the October meeting:
| Outcome | Implied probability |
|---|---|
| Hold at 3.75%-4.00% | About 87% (Kalshi and Polymarket each near 86.5%) |
| Quarter-point hike | About 14% (each near 13.5%) |
The rounded headline figures add to slightly more than 100%, which is a normal artifact of rounding and of averaging two markets. A cut was not listed on the page that was reviewed.
These are prediction-market prices, not the futures-based probabilities published by CME Group’s FedWatch tool, and this article does not cite FedWatch figures because they could not be verified. Readers comparing sources should expect small differences, since each venue has a different mix of traders and different contract designs. Odds can also move quickly after major data releases or Fed speeches.
The data the Fed is weighing
The September CPI release on October 14 gave the committee two competing signals:
- Headline inflation is high. Prices rose 0.6% in September and 3.7% over 12 months, driven by a 5.2% monthly jump in energy and a 9.1% increase in gasoline.
- Core inflation is lower. Excluding food and energy, prices rose 0.3% for the month and 2.6% over the year. Core was above the 0.2% forecast, though, according to Trading Economics.
Central bankers often look through energy spikes if they believe those spikes are temporary, because monetary policy works with a lag and cannot change oil supply. They become more concerned if higher fuel costs begin to push up expectations or wages. Whether that risk is rising is the key judgment at the October meeting.
What the Treasury market says
Daily Treasury yield data offers a second cross-check. On October 16, the 1-month bill yielded 4.12%, the 1-year 4.46% and the 2-year 4.74%, all above the 4.00% top of the current fed funds range. Short-dated yields reflect expectations for policy over their term, but also supply and demand for Treasuries, so the gap does not by itself prove that markets expect a hike. It does indicate that investors are not pricing a return to lower rates in the near term.
How to read the odds
- A high hold probability is not a guarantee. A 13-14% chance of a hike is small, but events with those odds happen regularly.
- Odds change with data. Between now and October 27, the market will see more weekly gasoline data and additional economic releases that could shift the picture.
- The statement and press conference matter as much as the decision. Even if rates are unchanged, wording about future moves often moves bond yields and the dollar.
- The Fed does not follow prediction markets. The committee makes its own assessment, and the Summary of Economic Projections, published only at some meetings, gives the clearest view of members’ expectations.
Why it matters to households
The federal funds rate anchors short-term borrowing costs. Credit-card rates, home equity lines and many adjustable-rate loans move with it, as do yields on savings accounts and money market funds. Longer-term rates, including mortgages, depend more on expectations for inflation and growth over many years, which is why they can move even when the Fed holds steady.
The September hike already raised the baseline for those short-term rates. If the committee holds in October, borrowing and savings rates are likely to stay near current levels in the near term, while a further hike would nudge them higher. Households with variable-rate debt are the most directly exposed to either outcome.
Key dates
- October 27-28: FOMC meeting, with the decision and statement on the second day.
- Weekly: Energy Information Administration gasoline prices, which feed directly into the next CPI.
- Mid-November: The October CPI report, the next major inflation data point after the meeting.
This article is informational, not investment advice.
Sources: Federal Reserve; DeFiRate; Bureau of Labor Statistics; Trading Economics; U.S. Department of the Treasury.