Markets price Fed hold in October, hike in December

Prediction markets put the probability of a Federal Reserve hold at the October 27 to 28 FOMC meeting at 91 to 95 percent on Sunday, with the target range at 3.75 to 4.00 percent, and price roughly a three-in-four chance of a 25 basis point hike in December.

Why it matters: October is priced as a pause in the recalibration that began with September's hike, so the statement language, the dissents and Chair Kevin Warsh's framing will move the December odds more than the decision itself.

Data as of Market pricing as of Sunday morning, October 25, 2026: Kalshi at 91 percent hold, 8 percent hike and 1 percent cut, with cross-venue reads of 93.5 percent on Kalshi, 95.5 percent on Polymarket and 90 percent in futures, as reported by Prediction Market Picks, and a 94 to 95 percent hold read observed by DeFi Rate at 06:51 ET on October 25. PIMCO's preview of October 22, 2026, read in full, put market pricing at roughly an 80 percent chance of a hold in the week before the meeting. The target range and September decision are the Federal Reserve's own record as summarised by both trackers.

The Federal Open Market Committee meets on Tuesday and Wednesday with the outcome close to settled and the argument all in the wording. The federal funds target range stands at 3.75 to 4.00 percent, set by a unanimous 25 basis point hike on September 16, the first increase since 2023. Prediction markets on Sunday priced a hold at 91 to 95 percent depending on venue, a hike at 6 to 8 percent and a cut at 1 to 2 percent. The same markets price December very differently: roughly a 75 percent chance of a hike at the December 9 meeting.

PIMCO’s preview, published on October 22, makes the same call in institutional language. The firm expects the FOMC to hold while keeping a clear tightening bias, sees a 25 basis point hike in December as the most likely next move, and reads both the September hike and the path ahead as a recalibration that would reverse last year’s cuts with one or two more increases. In the September Summary of Economic Projections, nearly all participants expected one or two more hikes after September. There are no new projections at this meeting, so the decision matters less than three questions PIMCO lists: how Chair Kevin Warsh frames the hold, whether the majority still describes September as a risk management adjustment, and how many officials dissent in favour of a hike now. Beth Hammack, Lorie Logan and Neel Kashkari dissented in July in favour of a hike and are the names to watch.

The curve has already done part of the work. PIMCO calculates that the 5-year, 5-year forward real interest rate is now roughly 3 percent, a level last seen in the early 2000s and up about 50 basis points since Warsh took the helm in June, and that the rise in longer-dated rates has offset part of the growth impulse from strong equity markets. This site’s market tables put the 10-year Treasury yield at 4.99 percent at Friday’s close, below 5 percent for a second straight day after Thursday’s haven rally.

What would change the pricing is not the hold but the signal around it. A statement that keeps December explicitly live, with dissents for an immediate hike, would validate the three-in-four December pricing. Language that stresses the headwind from higher long-term yields, or the mixed data since September, would cut it. The decision is due at 14:00 ET on Wednesday, October 28, the same day as the Bank of Canada decision, the Reserve Bank of New Zealand review and the UK Autumn Budget.

Markets price Fed hold in October, hike in December

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