CME FedWatch data shows >70% market probability of a Federal Reserve rate hike on October 28, breaking historical precedent of no October hikes before U.S. elections.
Macro & Markets ·
Market participants are pricing in over a 70% probability of a Federal Reserve rate increase at the October 28 policy meeting, according to CME FedWatch data. This expectation marks a significant departure from historical practice: the Fed has not previously raised rates during October ahead of a U.S. election cycle.
The elevated probability reflects market sentiment on inflation and economic conditions in the run-up to the meeting. A hike in late October would break with the central bank's past pattern of avoiding rate changes in the final month before voters go to the polls, a period traditionally seen as sensitive to monetary policy shifts.
It remains unclear whether the Fed will ultimately proceed with a hike or signal a pause, and how such a move would be received by asset markets and political actors in the weeks before the election.