Heading into the final quarter of the year, the Federal Reserve has put investors in an unfamiliar position: debating whether it will raise interest rates again, after a year that was widely expected to bring more cuts.
Coming into 2026, the central bank had already delivered 75 basis points of rate cuts the prior year, and many forecasters expected a similar easing path to continue. Instead, on September 16, the Federal Open Market Committee voted to raise its benchmark rate by a quarter point to a range of 3.75 to 4 percent, citing inflation that a separate report showed running at its highest level in nearly four years. Fed Governor Michael Barr's public support for a hike, along with that inflation data, had already pushed market odds of an October move above 70 percent in the weeks beforehand.
Then came Friday's jobs report for September, which came in weaker than expected. Treasury yields fell and stocks rallied on the news, since a cooling labor market gives the Fed more room to pause rather than tighten further. That reversal illustrates just how data dependent this stretch has become: the same week brought conflicting signals from inflation and employment, leaving the Fed's next move, at its October 27 and 28 meeting, genuinely uncertain.
Underneath all of this sits an energy market that has been quietly adding to the inflation picture. Oil prices have climbed amid tension in Middle East shipping lanes, with crude trading near its highest levels in some time, and European officials have floated releasing strategic fuel reserves to ease the pressure. Higher energy costs feed directly into the inflation readings the Fed is watching most closely.
The next major data points are the FOMC's meeting minutes on October 7 and the September consumer price index on October 14, both of which will shape expectations heading into the October 27 to 28 decision.
Did the Fed cut or raise rates most recently?
It raised rates by a quarter point in September 2026, to a range of 3.75 to 4 percent, reversing expectations for a cut.
When is the next Fed decision?
The Federal Open Market Committee meets October 27 and 28, with the rate decision announced that Wednesday afternoon.