BlockBeats news: On October 28, the Federal Reserve will announce its October monetary policy decision tonight (2:00 AM Beijing time on October 29). The market generally expects the target range for the federal funds rate to remain unchanged at 3.75%-4.00%, with a probability of holding steady above 90%. The real focus is not on the decision to hold rates steady itself, but rather on the wording of the Fed’s statement and whether Chair Powell will signal further hawkishness during the press conference. Key attention will be on how the meeting impacts the market’s heavily priced-in probability of another 25-basis-point hike in December. Below are the forward-looking views from multiple institutions on the Fed’s monetary policy meeting:
Goldman Sachs: We expect the Fed to pause rate hikes in October and raise rates by 25 basis points in December. If the FOMC continues its bi-meeting hiking pace through 2027, it may consider another hike in March. However, our baseline forecast does not anticipate a March hike, as inflation trends are expected to improve.
Citibank: Expects the Fed to pause rate hikes in October and raise rates by 25 basis points in December. However, if persistently weak stock markets lead to a sharp tightening of financial conditions, the likelihood of the Fed shifting to rate cuts will increase significantly.
Moody: The Federal Reserve will not and should not raise rates again when it meets this week. The U.S. economy is facing increasing risks, and the Fed’s missteps are among them. The bond market is a reason why the Fed need not rush to tighten financial conditions.
Farmers Credit: The Fed is expected to pause rate hikes in October and raise rates by 25 basis points in December. The prevailing sentiment among policymakers leans toward maintaining current rates; although recent inflation data has widened policy分歧, it has not yet reached the threshold that would compel the Fed to act immediately in October.
Nomura Securities: The Fed is expected to hold rates steady in October. Signals from dovish officials, emerging credit pressures, and the approaching midterm elections all support a pause in rate hikes. The Fed is guiding the market to expect a pause in October while preserving sufficient policy flexibility for a potential rate hike in December.
TD Securities: We expect the Fed to hold rates steady in October. The likelihood of an unexpected rate hike is above normal, but we believe the Committee will prioritize patience and wait until December to act. Holding rates steady in October would make a December rate hike more likely. We expect the Fed to raise rates two more times, in December and March.
Huatai Securities: Recent economic data have been mixed, but most Fed officials have indicated they do not favor consecutive rate hikes, and financial conditions have also tightened somewhat. We expect the Fed to hold rates steady at its October meeting, with possibly two hawkish voters dissenting. Under the baseline scenario, the Fed will raise rates once more in December this year and twice next year.
Morgan Stanley: We expect the Fed to hold rates steady in October while signaling to the market that further policy tightening remains possible. We anticipate the Fed will raise rates by 25 basis points in December and again in March next year, with overall risks still tilted toward additional tightening.
Bank of New York Mellon: We expect the Fed to pause rate hikes in October and raise rates by 25 basis points in December. We anticipate that rates will not rise steadily at every meeting, but will peak slightly above 4.5%, implying approximately three more rate hikes by this time next year.
Bank of America: The Fed has strong justification to raise rates in October. If the Fed holds steady in October, it will retain only one remaining rate hike option; if it hikes in October, it preserves the flexibility to raise rates again in December, better aligning the tightening cycle with market expectations for rate cuts in 2024 and 2025. Given the more threatening inflation data, this latter approach holds greater strategic value.