Two of the world's most closely watched central banks are heading into back-to-back meetings next week, and in both cases, investors and economists expect a pause rather than a change in interest rates.
The Federal Reserve's policy committee meets on October 28, with its current target range sitting at 3.75 percent to 4.00 percent. That range reflects a notable reversal over the past year: the Fed cut rates three times in late 2025, in September, October and December, bringing the range down to 3.50 to 3.75 percent, before raising it by a quarter point on September 16, its first increase since July 2023. Minutes from that September meeting, released October 7, said most Fed officials saw another increase as likely appropriate by the end of the year. A Reuters survey of 100 economists conducted October 16 to 20 found 94 expect the Fed to hold steady on October 28, and futures markets tracked by CME FedWatch put the odds of a pause at about 83 percent as of October 20. Weaker-than-expected September payroll data has shifted much of the market's attention to the Fed's next meeting, on December 9, as the more likely moment for any additional hike. Kevin Warsh, who has taken a prominent and relatively hawkish role on the committee this year, is seen by some analysts as the one voice who could still push for action sooner.
Across the Atlantic, the European Central Bank meets on October 29, a day after the Fed. The ECB raised its deposit rate by a quarter point in both June and September, bringing it to 2.50 percent, and is likewise expected to hold steady this month. Euro-area inflation reached 3.8 percent in September, driven largely by a sharp rise in energy costs, which ECB chief economist Philip Lane recently described as a second wave of the energy-related price shock that has repeatedly complicated the bank's policy path. Energy inflation ran close to 19 percent in the euro area last month, compared with roughly 2 percent for non-energy prices, a split that most economists say supports a patient approach for now. As with the Fed, a December meeting, which comes with fresh economic projections, is seen as the more natural point for the ECB to consider a further move.
Both the Fed's October 28 statement and the ECB's October 29 decision will be watched closely for any change in tone on inflation, with investors positioning for the possibility that either bank moves again in December.
Is the Fed expected to raise rates again this year?
Many Fed officials have said another increase is likely appropriate by year end, but most economists now expect that move, if it happens, at the December 9 meeting rather than in October.
Why is energy inflation such a big factor in Europe right now?
A recent surge in energy prices has pushed euro-area energy inflation to roughly 19%, far above the roughly 2% rate for non-energy goods and services, complicating the ECB's inflation outlook.