Summary of FOMC Report - October 28, 2026

The upcoming Federal Open Market Committee (FOMC) decision is set to be released at 6:00 PM, an hour earlier than usual due to the daylight saving time transition in the United States. This meeting will not include the Summary of Economic Projections (SEP), which is anticipated in December and will provide insights into future interest rate expectations and economic forecasts.

Context and Expectations

As the FOMC meeting coincides with the lead-up to the US midterm elections, current opinion polls suggest a Democratic victory in both houses of Congress. Market expectations indicate a less than 10% chance of a rate hike during this meeting, with a rate increase fully anticipated in December and two additional hikes expected before mid-2027.

Voting Dynamics

The decision is expected to be contentious, with three hawkish members potentially dissenting in favor of a hike, leading to a 9-3 vote to maintain current rates. The dollar's strength may be influenced by the voting outcomes and the tone of the post-meeting press conference, particularly comments from Kevin Warsh regarding future policy directions.

Macroeconomic Data Overview

Inflation Trends

Recent inflation data shows that both Consumer Price Index (CPI) measures exceeded expectations in September, with energy prices significantly contributing to this rise. Headline inflation accelerated to 0.6%, marking the fastest pace in five months, while core inflation rose by 0.3%. The increase in core inflation is largely attributed to a spike in owner's equivalent rent (OER).

Consumer Sentiment and Spending

Consumer sentiment remains low, particularly among low-income households, although retail sales have shown a surprising increase of 6.3% year-over-year. This growth is largely supported by declining household savings, indicating potential vulnerabilities in consumer spending.

Leading Economic Indicators

PMI data indicates robust GDP growth around 4%, with manufacturing underperforming relative to services. However, manufacturing employment is experiencing significant growth, and new export orders have expanded for the first time since June of the previous year.

Conclusion

The FOMC meeting is poised to be a critical event for market participants, with the potential for shifts in monetary policy that could impact the strength of the dollar and broader economic conditions. Investors will be closely monitoring the outcomes of the meeting and subsequent communications from Fed officials.