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Delta Exchange Blog

Research

October FOMC Preview: Inflation, Jobs and What the Fed May Do Next

Delta Exchange

October 23, 2026

The Federal Reserve faces a difficult decision at its October 28–29 meeting. Inflation has picked up, but job growth remains weak. The Fed must decide whether to raise interest rates again or wait for more data.

In September, the Fed raised its main interest rate by 0.25 percentage points to 3.75%–4.00%. The decision was unanimous, with a 12–0 vote. It was the first rate hike since 2023.

The October meeting will give markets a better idea of what the Fed may do next.

Latest US Data

Indicator	Latest reading	What it signals
CPI inflation	September: 3.7% YoY; +0.6% MoM	Inflation has picked up
Core CPI	September: 2.6% YoY; +0.3% MoM	Inflation remains firm, excluding food and energy
PCE inflation	August: 3.4% YoY; +0.3% MoM	The Fed’s preferred inflation measure remains high
Core PCE	August: 3.0% YoY; +0.2% MoM	Underlying price pressures remain
Nonfarm payrolls	September: +29,000 jobs	Job growth was weak
Unemployment rate	September: 4.2%	The job market is showing signs of slowing
Average hourly earnings	September: +3.0% YoY; +0.1% MoM	Wage growth has eased slightly

Market takeaway: Inflation is rising while job growth remains weak. The Fed must balance controlling prices against the risk of weakening the job market further. This makes the next rate decision difficult.

Also Read: CPI vs PCE: Will Upcoming Inflation Data Change the Fed’s Rate Path?

What Is Kevin Warsh Saying?

At the IMF and World Bank meetings in Bangkok on October 16, Fed Chair Kevin Warsh expressed confidence in the US economy. He pointed to strong investment, particularly in artificial intelligence.

However, he did not give a clear signal about the October rate decision. The Fed will need to assess the latest economic data before deciding its next move.

What Could the Fed Do?

1. Keep rates unchanged - Base case

The Fed may wait for more evidence before making another move. Keeping rates unchanged would not automatically mean rate cuts are coming soon.

2. Raise rates - Less likely

The Fed could raise rates by another 0.25 percentage points if it believes inflation will remain high. However, weak job growth gives it a reason to wait.

3. Keep rates unchanged but warn about another hike

The Fed could leave rates unchanged but warn that another increase remains possible if inflation does not cool. Even without an immediate rate hike, such a message could affect markets.

What Could This Mean for Markets?

Market	Possible reaction to a more hawkish Fed
US Treasury yields	Could rise if investors expect interest rates to stay high
US dollar	Could strengthen
US stocks	Could come under pressure, especially technology and growth stocks
Gold	Could weaken if bond yields and the dollar rise, although uncertainty may support demand
Bitcoin	Could face pressure if investors become less willing to take risks; a softer Fed message could support prices

What Traders Should Watch Next

Date	Release	Why it matters
October 27–28	FOMC meeting	Rate decision and clues about the Fed’s next move
October 29	US GDP and PCE inflation	Fresh information on economic growth and prices
November 6	October employment report	Shows whether job growth is weakening further
November 10	October CPI	Shows whether inflation remains high

The October 29 GDP and PCE reports will arrive after the Fed meeting. They could influence expectations for the December rate decision.

The Bottom Line

Inflation has picked up, while job growth remains weak. The Fed must decide which risk needs more attention.

A pause is the base case, while another rate hike appears less likely. For markets, the key question is whether the Fed believes the recent rise in inflation will continue or ease in the coming months.

The answer will shape expectations for interest rates, the US dollar, gold, stocks and Bitcoin into year-end.