Marey Sees October Fed Hold, Three Members May Dissent for a Hike

Philip Marey expects the Federal Open Market Committee to keep its federal funds target range at 3.75%-4.00% at its Oct. 27-28 meeting, while Hammack, Kashkari and Logan may dissent in favor of a hike.

At its September meeting, the FOMC unanimously raised its target range by 25 basis points, to 3.75%-4.00%. The September projections showed the median participant expected one more increase in 2026, while four dots indicated two additional hikes before year-end.

Marey expects the three officials who dissented in July to favor another increase this month. He considers them likely to be three of the four participants whose projections pointed to two more hikes, though their October dissents are not certain.

Marey’s forecast calls for the FOMC to pause in October and raise rates in December. He expects that move to bring the federal funds rate to the median participant’s year-end view. The committee is not scheduled to update its economic projections in October; the next update is due in December. A 50-basis-point increase at that meeting is less likely, Marey expects.

Fed Chair Kevin Warsh has declined to signal the Fed’s next rate decision. Marey expects Warsh to maintain that approach at the post-meeting news conference, while saying underlying inflation trends have not meaningfully improved. He does not expect Warsh to explicitly signal that a hike is coming soon.

Marey’s longer-term baseline has the Fed holding rates in 2027, in line with September’s median projection, though he sees the risk of further increases if inflation rises. He expects consumer price inflation to fall to 2.2% in the final quarter of 2027, which would open the way for the first rate cut in early 2028. The FOMC’s next policy decision is scheduled for its Oct. 27-28 meeting.