Fed Set to Hold Rates. But Is Another Hike Coming in December?

The Fed is widely expected to leave interest rates unchanged at its October meeting. But for traders, the bigger question is what comes next.

The decision is due at 2:00 a.m. Singapore time on Thursday, followed by Fed Chair Kevin Warsh’s press conference 30 minutes later.

Markets are pricing in little chance of an October hike. A recent economist poll also showed almost unanimous expectations for rates to stay at 3.75%-4.00%. But most economists still expect the Fed to raise rates again in December.

Why? Inflation is still proving difficult to bring down, keeping pressure on the Fed to stay hawkish.

That makes Warsh’s comments especially important. If he signals that recent inflation data supports another hike in December, the dollar and Treasury yields could move higher, while gold and stocks may come under pressure.

If he sounds more cautious and suggests the Fed can wait for more data, the reaction could be the opposite: the dollar and yields may ease, giving gold and stocks some room to rebound.

For traders, the takeaway is simple:

October hold → watch the signal for December.

More hawkish → USD ↑ / Gold ↓ / Stocks under pressure

More dovish → USD ↓ / Gold ↑ / Stocks may get a lift

The key is not just what the Fed says, but how its message compares with what the market was already expecting. That could set the tone for the next major move across the dollar, gold and US equities.