US Fed Decision: What to expect from Warsh's October meeting

Benchmarks Nifty22,752.15-1.05FEATURED FUNDS★★★★★Motilal Oswal Midcap Fund Direct-Growth5Y Return18.32 % Invest NowFEATURED FUNDS★★★★★UTI Aggressive Hybrid Fund Regular Plan-Growth5Y Return8.45 % Invest NowEnter search text: Powered By

The Economic Times daily newspaper is available online now. Read Today's Paper US Fed Decision: What to expect from Warsh's October meetingBy Anupam Nagar, ETMarkets.comLast Updated: Oct 27, 2026, 01:02:00 PM ISTSynopsis

The US Federal Reserve is widely expected to keep interest rates unchanged at its October meeting amid persistent inflation and elevated borrowing costs. Investors will scrutinise Chairman Kevin Warsh’s comments on inflation, policy independence and future rate decisions, with potential December tightening and internal disagreements remaining key concerns for financial markets and households.

The Federal Reserve is widely expected to keep interest rates unchanged on Wednesday. Investors and economists will closely examine its policy statement for clues about the next move and the central bank's assessment of persistent inflation pressures.

According to the Associated Press (AP), the Federal Open Market Committee's October 27-28 meeting comes amid rising consumer costs, elevated mortgage rates and renewed questions about the Federal Reserve's independence under Chairman Kevin Warsh, who was appointed by President Donald Trump earlier this year.

As on 27 Oct 2026, 01:30 AM IST

S&P 500 Top Gainers

Synopsys454.33(5.62%)Akamai Technologies98.50(5.31%)Tesla391.62(5.21%)Lockheed Martin635.20(5.13%)

S&P 500 Top Losers

Fair Isaac708.07(-13.15%)Coterra Energy32.56(-8.62%)DoorDash168.44(-6.10%)Charter Communications102.18(-5.92%)
Also Read | Who are the biggest investors backing Anthropic? A look at key stakeholders

The meeting also takes place less than a week before the US midterm elections, with affordability concerns remaining a key political issue as gasoline prices rise and grocery costs stay elevated.

Mortgage rates have added to the financial strain on households. The average rate on a 30-year mortgage climbed to a three-year high of 7.4% earlier this month before easing to 7.32% last week, compared with just under 6.2% a year ago. Oxford Economics estimates that this year's sharp increase has put homeownership out of reach for another 5 million households, AP reported.

Live Events

Any further tightening by the Fed could increase borrowing costs and put additional pressure on prospective homebuyers.

Fed Rate Hike Unlikely Despite Persistent Inflation
Financial markets initially considered the possibility of a quarter-percentage-point rate increase after inflation data came in hotter than expected for the previous month. Such a move would have lifted the Fed's benchmark interest rate to approximately 4.1%.

However, several senior policymakers have played down the prospect of an October rate hike, and futures markets now indicate that investors see little chance of an increase from the current rate of around 3.9%.

The Fed typically raises borrowing costs to restrain spending and bring inflation under control. However, policymakers must also weigh the broader economic consequences of tighter financial conditions.

Also Read | Global Market: South Korean shares jump over 4% as AI chip rally lifts Samsung, SK Hynix

Federal Reserve Vice Chair Philip Jefferson has pointed to the sharp rise in longer-term market interest rates, suggesting that policymakers need more time to assess financial conditions before deciding on their next move, AP reported.

Joseph LaVorgna, chief economist at SMBC Americas and a former senior Trump administration official, expects the central bank to avoid an increase immediately before the election, according to AP.

Although most economists consider a rate hike unlikely, persistent inflation could keep the possibility of tighter monetary policy on the table in the coming months.

Forward Guidance Under Scrutiny
The meeting will also test Warsh's approach to communicating monetary policy. The Fed chairman has expressed reservations about forward guidance, the practice of signalling the central bank's likely policy direction in advance.

Warsh has argued that such signals can commit policymakers to a particular course and limit their ability to respond flexibly to changing economic conditions.

However, recent remarks by senior Fed officials have given markets clues about the likely outcome of the October meeting, raising questions about whether the central bank is effectively continuing the practice under its new leadership.

Aditya Bhave, head of US economics research at Bank of America, has highlighted the uncertainty surrounding the approach, according to AP. If Warsh supports the recent messaging by other policymakers, it could raise questions about his opposition to forward guidance. If he does not, a surprise policy move could undermine the credibility of signals provided by other officials.

Nevertheless, economists broadly expect the Fed to leave rates unchanged on Wednesday.

Fed Independence Remains a Key Concern
Warsh's relationship with Trump is another issue investors will monitor closely.

At its September meeting, the Fed raised interest rates despite the president's preference for lower borrowing costs. The decision helped ease some concerns that Warsh might prioritise the White House's economic preferences over the central bank's inflation mandate.

James Knightley, chief international economist at ING, said the September decision had encouraged markets to view the Fed as continuing to exercise independent judgment, AP reported.

However, questions remain about the extent of communication between Warsh and Trump. The president has said he spoke to the chairman before the September meeting and indicated that Warsh could support a rate increase because other policymakers had publicly backed the move.

Trump has also criticised the rate-setting committee, describing it as politically motivated.

Separately, Trump has renewed efforts to remove Fed Governor Lisa Cook. The Supreme Court blocked an earlier attempt to remove her in June. A successful removal would create another vacancy on the central bank's board for the president to fill.

Warsh declined to discuss his communications with Trump at the September news conference, leaving uncertainty about the nature and extent of their interactions.

Derek Tang, an economist at Monetary Policy Analytics, said questions about the chairman's independence remain unresolved, according to AP.

Inflation Outlook Could Shape December Decision
Inflation is expected to remain central to the Fed's policy deliberations after price increases exceeded economists' expectations for two consecutive months.

Rising fuel costs have added to concerns that inflation could spread across the broader economy. Diesel prices reached a record $6.53 in late September and have since eased only modestly to $6.35.

Higher diesel prices increase transportation costs for businesses, affecting the movement of groceries, vehicles and other goods. Companies could pass those additional expenses on to consumers, extending inflationary pressures beyond the energy sector.

Inflation has also remained above the Fed's 2% annual target for an extended period. According to AP, Bhave noted that the target had not been achieved for an entire calendar quarter since the final three months of 2020.

Investors will therefore pay close attention to how Warsh characterises the inflation outlook and whether he reiterates the need to bring price growth back to the central bank's target more quickly.

Any indication that policymakers remain dissatisfied with the pace of disinflation could strengthen expectations of a rate increase at the Fed's December meeting.

Possible Dissent Could Signal Support for Higher Rates
The Fed's September rate decision was unanimous, but the October meeting could produce dissenting votes as policymakers debate whether the current interest rate is sufficiently restrictive.

Beth Hammack, president of the Federal Reserve Bank of Cleveland, and Lorie Logan, president of the Federal Reserve Bank of Dallas, are among the officials considered most likely to favour a rate increase, AP reported.

Both have expressed concerns that monetary policy may not be tight enough to slow economic activity and bring inflation under control.

According to AP, some economists believe that dissenting votes could ultimately benefit Warsh by demonstrating that support for higher interest rates remains within the rate-setting committee.

For investors, the number and direction of any dissents could offer additional insight into the balance of opinion within the Fed and the likelihood of further tightening.

With a rate hold widely anticipated, the central bank's inflation assessment, internal divisions and guidance on future policy are likely to determine how markets interpret Wednesday's decision.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)
Add as a Reliable and Trusted News Source Add Now!
(You can now subscribe to our ETMarkets WhatsApp channel)
Read More News onUS Federal ReserveFed interest rate decisionFederal Reserve meetingFed rate outlookKevin WarshUS inflationinterest ratesmonetary policyFed rate hikeDecember rate decision

(What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

...moreless
(You can now subscribe to our ETMarkets WhatsApp channel)
Read More News onUS Federal ReserveFed interest rate decisionFederal Reserve meetingFed rate outlookKevin WarshUS inflationinterest ratesmonetary policyFed rate hikeDecember rate decision

(What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

...morelessPrime ExclusivesInvestment IdeasStock Report PlusePaperWealth Edition

• KYC and KYB: Inside Damani’s Avenue Supermarts that refuses to charge more – Part 1 of 3

• Will oil turn into a lingering problem? Is the world economy, India, or the market prepared?

• KYB and KYC: Business behind the wealth creator called ‘Divi’s Lab’ – Part 2, concluding

• KYB and KYC: Business behind the wealth creator called “Divi’s Lab” – Part 1

• The global business of promising more

• One company, 2 words. Bond yield and CDS: Will they decide the fate of global markets?

• 1
• 2
• 3

View all StoriesContinue reading with one of these options:Limited AccessFreeLogin to get access to some exclusive stories
& personalised newslettersLogin NowUnlimited AccessStarting @ Rs120/monthGet access to exclusive stories, expert opinions &
in-depth stock reportsSubscribe NowET

Unlock Access to All Exclusives with ETPrime FREE TRIAL

15 Days Free: Unlock All ETPrime Exclusives, Market Tools & ePapers

Trial offer expiring in00 : 05 : 00

I'd rather pay ₹2599 now

Uh-oh! This is an exclusive story available for selected readers only.

Worry not. You’re just a step away.

Prime Account Detected!

It seems like you're already an ETPrime member with

Login using your ET Prime credentials to enjoy all member benefits

Log out of your current logged-in account and log in again using your ET Prime credentials to enjoy all member benefits.

Unlock ETPrime's Exclusive Stories Today!

Big Price Drop! Flat 40% Off

Student Only OfferAlready a Member? Sign In nowAlready a Member? Sign In nowAlready a Member? Sign In now

Offer Exclusively For You

Save up to Rs. 700/-

ON ET PRIME MEMBERSHIP

Avail Offer

Offer Exclusively For You

Get 1 Year Free

With 1 and 2-Year ET prime membership

Avail Offer

Offer Exclusively For You

Get 1 Year Free

With 1 and 2-Year ET prime membership

Avail Offer

Offer Exclusively For You

Get Flat 40% Off

Then ₹ 1749 for 1 year

Avail Offer

Offer Exclusively For You

ET Prime at ₹ 49 for 1 month

Then ₹ 1749 for 1 year

Avail Offer

Special Offer

Get flat 40% off on ETPrime

Avail OfferAvail OfferClaim NowAlready a Member? Sign In now

Need Assistance?

Connect with an ETPrime expert for personalized support and guidance

+91 9484700004'; }); } if(listing) { var h3 = "You tried reading " + listArr.length + " locked stories in the past " + threshold + " days.", h4 = "Become an ET Prime member and don't miss out on these exclusive stories."; var html = '

' + h3 + '

' + h4 + '

' + listing + '

'; $('#paidSCWidget').html(html); var callback = $('#paidSCWidget').attr('data-callback'); if(callback && window[callback]) { window[callback](); } customDimension.dimension72 += ' | Shown SYFT no Trial_With Missed Paywalled Articles Collection'; } else { _processNormal() } } }); } else { _processNormal(); } } catch (e) { _processNormal(); } }, function () { _processNormal(); }); //console.log('storyCollectionLoad', $); }

What’s Included with

ETPrime Membership

1Exclusive Insights That Matter

Uncover the truth with our investigative stories

Make strategic moves using the real-world case studies

Read industry-specific stories to identify emerging trends

Spot opportunities with
in-depth insights that matter

• Trump temper on H-1B visas is forcing Indians to do these things to stay put in US

  What Adani’s US indictment means for India Inc’s overseas fundraising

• Why veterans like Reliance, L&T are on acquisition spree? Aswath Damodaran has an answer.

  Will China’s dollar bond sale in Saudi Arabia trump the US in financial world?

• Huawei launches its own OS to compete with Google and Apple. But can it win beyond China?

  The problem with lab grown diamonds

• Why a falling rupee is a better option for the economy

  A list of top 20 momentum stocks that have delivered massive returns in one year

2Invest Wisely With Smart Market Tools & Investment Ideas

Alpha Trade

Get daily trade ideas from SEBI-registered research analysts.

Investment Ideas

Grow your wealth with stock ideas & sectoral trends.

Stock Reports Plus

All-in-one stock research with Stock Score, peer comparison & key signals.

BigBull Portfolio

Get to know where the market bulls are investing to identify the right stocks.

Stock Analyzer

Check the score based on the company's fundamentals, solvency, growth, risk & ownership to decide the right stocks.

Market Mood

Analyze the market sentiments & identify the trend reversal for strategic decisions.

Stock Talk Live at 9 AM Daily

Ask your stock queries & get assured replies by ET appointed, SEBI registered experts.

3Stay informed anytime, anywhere with ET ePaper

ePaper - Print View

Read the PDF version of ET newspaper. Download & access it offline anytime.

ePaper - Digital View

Read your daily newspaper in Digital View & get it delivered to your inbox everyday.

Wealth Edition

Manage your money efficiently with this weekly money management guide.

TOI ePaper

Read the PDF version of TOI newspaper. Download & access it offline anytime.

Deep Explainers

Explore the In-depth explanation of complex topics for everyday life decisions.

Health+ Stories

Get fitter with daily health insights committed to your well-being.

Personal Finance+ Stories

Manage your wealth better with in-depth insights & updates on finance.

5Enjoy Complimentary Subscriptions From Top Brands

Stream new documentaries from all across the world every day.

Stories you might be interested in