FOMC Preview: A Hawkish Hold on the Cards, with December in Focus

FOMC Preview: A Hawkish Hold on the Cards, with December in Focus

by David Coulling Comment Closed
FOMC Preview: A Hawkish Hold on the Cards, with December in Focus The Federal Open Market Committee (FOMC) concludes its two-day meeting tomorrow (28 October 2026), with the statement due at 14:00 ET and Chair Kevin Warsh’s press conference at 14:30 ET. There is no Summary of Economic Projections or new dot plot (the next one arrives in December). Markets and most analysts expect a hold in the 3.75–4.00% target range after September’s unanimous 25 bp hike—the first in three years—under Warsh. What the FedWatch Tool Is Saying CME FedWatch (fed funds futures) prices roughly a 90–92% probability of a hold and only ~8–10% chance of a 25 bp hike. December is the clearer event: markets assign ~75–80%+ odds of at least one further hike by year-end (most likely another 25 bp to 4.00–4.25%). Further out, pricing implies additional tightening into 2027 before any easing discussion. Research houses align closely: around 50 of 51 expect a hold this week, with near-universal consensus on...
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Yesterday’s FOMC: Hawkish Pivot Boosts the Dollar

Yesterday’s FOMC: Hawkish Pivot Boosts the Dollar

by David Coulling Comment Closed
Yesterday’s FOMC: Hawkish Pivot Boosts the Dollar The Fed held the federal funds rate steady at 3.50%–3.75%, as widely expected. But the real story was in the details: The policy statement was dramatically shortened and stripped of forward guidance. The Summary of Economic Projections (dot plot) turned notably hawkish: nine officials now see at least one rate hike by year-end, with 2026 inflation forecasts revised higher (PCE to 3.6%). Warsh emphasised data-dependence, inflation as a “choice,” and a commitment to restoring credibility. Markets reacted with a risk-off move (stocks sold off), but the US Dollar Index (DXY) jumped, breaking toward the 99.50–100.00 zone. Higher US rate expectations relative to the rest of the world provided immediate support. This Morning’s BoE Decision: Further Tailwind for USD The Bank of England held its Bank Rate at 3.75%, in line with expectations, but the accompanying tone and vote split reinforced a more cautious stance amid soft UK labour data and easing inflation pressures. GBP/USD dropped over 100...
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