HighIV Macro Policy & Sovereign Debt28 October 2026, Wednesday
The Fed looks set to hold, and the dissents carry the signal
The Fed announces its decision at 21:00 TRT on 28 October, and markets put the odds of rates staying at 3.75-4.00% above 90%. Euronews says up to three members could dissent in favour of a hike, while CME prices a December hike at 73%.
The decision comes at 21:00 TRT, followed by Chair Kevin Warsh's press conference at 21:30 TRT. September's hike was the Fed's first in three years. Bloomberg reported on 26 October that the odds of an October hike were above 70% before speeches by Williams and Jefferson; they have since fallen below 30%. Euronews puts the probability of a hold above 90%, and CME FedWatch assigns 73% to a 25 basis point hike at the 8-9 December meeting. In our 24 October entry that figure was 84%, so December pricing has retreated within a week.
According to Euronews, Cleveland Fed President Beth Hammack and Dallas Fed President Lorie Logan may vote for a hike, and as many as three dissents are being discussed. The data feed both sides. Annual CPI rose from 3.4% to 3.7% in September, gasoline has topped 4 dollars a gallon for three months, and diesel hit a record 6.53 dollars at the end of September. In the same month non-farm payrolls rose by only 29,000 and unemployment climbed to 4.2%. The 30-year mortgage rate eased to 7.32% after reaching a three-year high of 7.4% in early October.
The views compiled by Bloomberg are split. Stephen Stanley of Santander US expects a hold this week and a hike in December. Aditya Bhave of Bank of America forecasts a surprise hike this week on the grounds that inflation has worsened since September. Kathy Bostjancic of Nationwide warns that failing to tighten could unsettle bond investors and push longer-dated yields higher. The midterm elections fall on 3 November, six days after the decision, and third-quarter GDP and September PCE data are due at 15:30 TRT on 29 October.
Talay assessment
Bottom line
The rate decision itself is largely priced; the information is in the vote split and in how much room Warsh leaves for December. No dissent would cast doubt on a December hike, while two or more dissents would strengthen it. The slide in December odds from 84% to 73% in a week shows the market starting to price weak hiring and the midterm calendar. The next day's PCE data could quickly change how the decision is read.
Likely effects
- US front-end yieldsUncertainWeeks
The number of dissents sets the direction of December pricing; two or more push two-year yields up, while unanimity pushes them down.
- DollarNegativeWeeks
The dollar is near an 18-month high; a hawkish hold preserves that strength and keeps pressure on emerging market currencies.
- Housing marketNegative1–6 months
A 30-year mortgage rate stuck at 7.32% entrenches conditions that, by Oxford Economics' estimate, priced 5 million more households out of home purchases this year.
- TürkiyeNegative1–6 months
If the Fed keeps December open, dollar rates stay high, which feeds directly into Türkiye's external borrowing costs and the price of foreign portfolio flows.
Possibilities, ranked
- 1Hawkish hold, one or two dissents60%
Rates stay at 3.75-4.00%, the statement stresses inflation risk, and Hammack and Logan vote for a hike.
Watch: The vote split and number of dissents in the statement
- 2Unanimous hold25%
There are no dissents, Warsh stresses data dependence and December pricing falls below 73%.
Watch: How CME FedWatch December hike odds move after the decision
- 3Surprise hike15%
The committee lifts rates to 4.00-4.25%, arguing that inflation has worsened since September.
Watch: The decision announcement at 21:00 TRT on 28 October
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- Probability of a hold▲ >90%
- December hike (CME)▼ 73%
- September CPI▼ 3.7%