ABN AMRO analyst Rogier Quaedvlieg expects the Fed to keep policy rates unchanged this week despite recent inflation spikes, but forecasts a 25‑bp hike in December.

ABN AMRO’s senior economist Rogier Quaedvlieg projects that the Federal Reserve will leave its target range at 3.75‑4.00% unchanged at the upcoming October meeting. He says the decision is more finely balanced than market pricing suggests, with inflation showing a second‑month upside surprise but a narrowing breadth and a cooling labour market giving policymakers room to pause.

Why a pause makes sense

• Inflation breadth is narrowing, indicating the recent price acceleration has not become broad‑based
• The labour market is losing momentum, reducing immediate pressure on the Fed
• Recent PCE data and softer components such as software and memory chips suggest the spike may be temporary

Outlook for the year end

• ABN AMRO still expects a final 25 basis‑point increase in December
• After the December hike, the bank forecasts an extended period of unchanged rates
• Underlying inflation is expected to resume a downward trend in 2027, even if near‑term readings stay uncomfortable

What traders are watching

• The Fed’s October statement for clues on how it views inflation breadth and wage pressures
• Core PCE releases later this week for any sign of persistent price pressure
• Potential market reaction to a December hike and the shape of the rate‑path curve

Related news

• Fed holds rates steady, bitcoin barely moves as December hike looms
• Gold slips toward $4,000 as oil above $100 clouds Fed outlook
• Obr downgrades uk growth forecast for 2027 despite healey budget
• Bitcoin and gold hold near key levels ahead of Fed decision

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This article is compiled from international market news for information only. It is not investment advice.