Does the Fed still raise interest rates in October?

Since the Federal Reserve raised interest rates on September 16, statements from various committee members have remained hawkish, pushing the chances for another hike in October as high as 71% on Tuesday. 

Earlier on Tuesday, Fed’s Barr reiterated the need for more rate hikes to curb rising inflation, echoing Fed’s Barkin, who on September 22 said that one rate hike may not be enough.

Barr’s Tuesday statement pushed the chances for an October hike to the highest percentage yet, while a no-change decision was down to the lowest.

However, things changed quickly later in the day when Fed’s Williams, who is a permanent FOMC voter and the vice chair of the rate-setting committee, played down the chances of a rate hike in October, following the September hike.

“With the policy action we took at our September meeting, there is no need for urgency. We have time to gather more information,” he said.

Although Williams acknowledges that at 3.7%, inflation is “unquestionably too high”, he also pointed to the decelerating housing prices. The median sales price of new houses in the uS fell from about $442,600 in Q4 2022 to about $408,500 in Q1 2026, before spiking slightly to $410,700 in Q2, according to the Federal Reserve Bank data. 

However, this does not completely rule out more hikes this year, although the overall chances of a rate hike between now and December 31, 2026 are just at 2% on Polymarket. 

There may still be one more hike before the end of the year, likely in December, Williams said.

Since his statement, the chances of a rate hike in October have fallen to about 42%, while a hold decision is now at 57% on Polymarket. This happened on a day when one Fed committee member expressed the need for more hikes, while another played down the need for back-to-back hikes.

Could the Fed still hike rates in October?

While a 42% chance of a 25 basis point hike is significant and suggests that this may still be far from over, we have to look at the Fed’s previous interest rate decisions during the festive period. 

The Fed has not raised rates in October or November in the last ten years, with the only notable hikes, three in total during the festive period, coming in December.

Williams suggestion of one more hike, potentially in December, is perhaps now more plausible compared to an October hike, looking at what happened in the past. 

A no-change decision has also now surpassed a 25 basis point increase, volume-wise on Polymarket, with nearly $5 million locked in versus about $4.4 million.