Dennis Hendrickson
Money & Income · October 28, 2026

Fed Likely to Hold Interest Rates Steady This Week as Inflation Sits at 3.7 Percent

The central bank meets Wednesday with the midterms five days out, and traders are pricing in a 92.8 percent chance it leaves rates alone despite inflation ticking up.

The Federal Reserve is likely to hold interest rates steady when it meets this week, with the midterm elections five days away and inflation still running hot. Traders are pricing in a 92.8 percent chance of a hold, according to the CME FedWatch tool, a sharp reversal from a month ago when markets saw a roughly 64 percent chance of another quarter-point hike. That shift comes even though annual inflation rose to 3.7 percent in September from 3.4 percent in August, according to the consumer price index, with the Iran war still pushing on prices. Fed Vice Chair Philip Jefferson and New York Fed President John Williams have both signaled they want more time to evaluate the data before backing another hike. Patrick Harker, the former Philadelphia Fed president, told The Hill the Fed has signaled clearly it plans to hold at this meeting.

Why a Hold Today Doesn't Mean Relief for Hiring Tomorrow

Here's my take on the jobs side of this: a hold is not a green light. Dr. Ellen Meade, a former Fed policy adviser now at Duke, said she does not expect the Fed to do much more than update how it characterizes the economy in Wednesday's statement. Harker made a similar point when he said he does not think moving the fed funds rate would make a whole lot of difference to the macro economy right now, because monetary policy decisions typically take 12 to 18 months to show up in spending. That lag matters for the job market. Businesses that are deciding whether to add a position or hold off are reacting to the rates and borrowing costs already in place, not to whatever the Fed announces Wednesday. A hold freezes the current level of uncertainty in place rather than resolving it, and that uncertainty is exactly what makes employers slow to commit to new hires.

After the Fed's quarter-point hike last month, 16 of 18 FOMC officials projected at least one more hike this year, and Fed Vice Chair Michael Barr and Philadelphia Fed President Anna Paulson both previewed further tightening in public remarks. That hawkish backdrop, combined with a hold for political timing, tells workers the path of borrowing costs is still pointed up, not down. If you are job hunting or negotiating pay, do not assume this week's decision means things are getting easier.

The Borrowing Costs Small Business Owners Are Already Stuck With

For anyone running a business, the number that matters is not the Fed's target rate, it's what you're actually paying right now. The average 30-year fixed mortgage rate is above 7.3 percent, up about 1.3 percentage points from the week before the Iran war began, according to Freddie Mac. The average credit card interest rate hit 19.7 percent earlier this month, the first time it has been that high since December 2025, according to Bankrate. Those costs hit small business owners twice, once on any real estate or equipment loan tied to variable rates, and again on working capital that gets carried on a card between invoices. A hold this week does not lower either of those numbers. It just stops them from climbing further for now.

Christopher Brigati's point about markets going quiet ahead of earnings from Microsoft, Alphabet and Amazon this week is worth sitting with if you run a business. Big companies positioning for a steady Fed and strong tech earnings is a different environment than a small contractor deciding whether to finance a new truck at today's rates. The headline calm in the markets does not mean calm in a small business owner's cash flow.

What My Insurance Agency Sees When Borrowing Costs Stay High

In my insurance agency, this shows up at renewal time more than anywhere else. When a client's borrowing costs are elevated, premium financing, which a lot of commercial clients use to spread out the cost of a policy instead of paying it all up front, gets more expensive right along with it. A business owner who is already absorbing a 7.3 percent mortgage rate or a credit card balance at 19.7 percent is less able to absorb a premium increase on top of it, even a modest one. That squeeze does not show up in the CPI number, but it shows up in what a small business owner has left over at the end of the month. The same dynamic hits the contractors my marketing company works with: roofers, pressure washers and lawn care operators who finance trucks and equipment on short-term loans that move with the rate environment long before the Fed's committee language changes.

What to Watch Before the Fed's Next Meeting on Dec. 7-8

The FOMC's next scheduled meeting is December 7-8, and that is where the real test comes, after the midterms are decided and officials have more inflation data in hand. Harker was blunt about what he thinks the Fed should do with that data, saying inflation above 2 percent for five and a half years is a pattern, not bad luck, and that the Fed cannot keep looking through repeated shocks. Fed Chair Kevin Warsh has said his goal is 2 percent inflation and that the responsibility for the current run above that level sits with the Fed itself.

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