Fed expected to hold rates Wednesday as 3.7% inflation dominates the midterm race

The Federal Reserve is meeting in Washington this week and is widely expected to keep its benchmark interest rate steady. The decision comes Wednesday, Oct. 28 ¹. J.P. Morgan Wealth Management's base case is also a hold ².

The timing matters. Inflation is the top worry for many voters, and control of the House and Senate is on the line in the Nov. 3 midterm election ¹.

On tapeCNBC Television · Oct 26

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Prices are still climbing

The yearly inflation rate rose to 3.7% in September from 3.4% in August ¹. Prices rose 0.6% from August to September, the biggest monthly jump since April. Energy and gasoline drove most of it ².

The Fed raised rates by a quarter of a percentage point in September, after months of inflation well above its 2% target ¹. That was its first hike in more than three years ².

From Channel GOPEl-Sayed: my faith isn't raising your gas pricesAbdul El-Sayed · 129 plays · captioned, with the source named

Fed Chair Kevin Warsh said at the time that inflation is too high and has been for too long ¹. Some analysts say holding now is a risk. Deutsche Bank analysts wrote that “The case for skipping [a rate hike in] October is not terribly compelling” ¹.

Why the Fed is likely to wait

Fed officials say they have time. Michelle Bowman, the Fed's vice chair for supervision, said Oct. 14 that “We have some time to wait and see how financial conditions evolve before we take more action” ¹. San Francisco Fed President Mary Daly said she does not feel the Fed must decide “with a limited set of information” ¹.

NBC News also reports the Fed tries to stay out of politics. A hike days before an election could look political or could sway votes ¹.

A hold may not be the last word. J.P. Morgan strategists expect about 50 basis points of further hikes, which is half a percentage point, though they say the timing is unclear ². Minutes of the Fed's September meeting showed most participants think another hike will likely be justified by the end of 2026 ².

The job market is also soft. Employers added just 29,000 jobs in September, and the unemployment rate ticked up to 4.2% ².

Voters blame the White House

In the latest NBC News poll, Trump's approval is 27% on the cost of living and 29% on the war with Iran ¹. Two-thirds of Americans called high gas prices a “very serious” or “somewhat serious” problem. More than half said current economic conditions have changed the groceries they buy ¹.

Even the White House sounds worried. Kevin Hassett, director of the National Economic Council, called the latest inflation number “a disappointing number” ¹. He also said the reasons voters feel so negative are something the administration is still trying to understand ¹.

That matters because the Fed's tool for fighting inflation is higher interest rates. Higher rates make borrowing more expensive, including for mortgages and credit cards. Voters are being squeezed by prices and could soon face higher borrowing costs too. This is analysis, not a finding from the sources.

The Record

1. Sep 15, 2026The Fed raised rates by a quarter of a percentage point, its first hike in more than three years ². NBC dates the hike only to September ¹.
2. Oct 14, 2026Fed Vice Chair for Supervision Michelle Bowman said the Fed has time to wait and see before acting further ¹.
3. Oct 28, 2026The Fed is expected to announce a decision to hold rates steady ¹.

Sources

1. NBC News, “Fed expected to hold interest rates steady as inflation tops midterm voters’ concerns” (2026-10-27). nbcnews.com/business/economy/fed-interest-rates-inflation-mi
2. J.P. Morgan Wealth Management (Chase), “Will the Federal Reserve hike rates at the October 2026 FOMC meeting?” (2026-10-27). chase.com/personal/investments/learning-and-insights/article

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