On Wednesday, Oct 10th The Fed will announce whether it will maintain or cut rates.
And, like many Americans in December, they’re driving in blizzard conditions as they rely on old inflation data (from September) to inform policy decisions, since the October CPI report was cancelled due to the government shutdown.
The target range sits at 3.75–4%, with the effective rate near 3.9%.
In one of the more precarious policy moments in recent history, the committee is becoming unusually split: most are concerned about cutting too late, while a growing minority is worried about cutting too quickly.
Fed Chair Powell sought to temper expectations earlier this month, emphasizing that a rate cut is “not a foregone conclusion.” But Vice Chair John Williams later signaled a more dovish bent, saying he still saw “room for further adjustment.” Markets treated Williams’ comment as a strong signal of a rate cut and CME futures now price in a nearly 90% chance of a quarter-point cut.
Inflation adds another complication. Based on September BLS data, the CPI has moved from 2.4% YOY (2024) to 3.0% YOY (2025). Forward looking (1 year ahead) consumer inflation expectations rose from 2.9% to 3.2% from October 2024 to October 2025. These changes aren’t dramatic, but they are moving upward.
This leaves policymakers weighing two imperfect paths: hold until inflation convincingly moves back toward 2%, or cut early to avoid over tightening into a slowdown.
Deeper Analysis
The 10-year Treasury has hovered around 4.10% since September, showing little reaction even as futures markets shift. Reverse-repo rates moved higher, and the effective federal funds rate is pressing against the top of the target range. Together, these suggest deeper liquidity pressures in the banking system.
Regardless of the Fed’s decision, the more telling indicator will be whether the 10-year Treasury finally moves out of its recent range—and whether the upcoming Nov. 18 CPI (inflation) report shows inflation cooling or firming again. Either outcome should offer a clearer view of the road ahead.
Subscribe here for the CPI update as soon as it hits.