Here’s what the Fed’s decision means for your money The Fed’s decision to raise rates at its last meeting drove up borrowing costs, and the expectation that more rate hikes are in the works means consumers are unlikely to see much relief in the near term. Those high borrowing costs add to existing affordability challenges, particularly for low- and middle-income consumers. As long as the Federal Reserve keeps rates in the current target range of 3.75% to 4%, consumers are unlikely to see much relief. High borrowing costs add to existing affordability challenges, particularly for low- and middle-income consumers. Higher rates continue to impact credit cards, auto loans and mortgages. Credit card rates have risen to their highest levels since the end of 2025, while 30-year mortgage rates have remained above 7%, making homeownership less affordable. Auto loan rates have also remained near 7%, with even higher rates being common in the used car market. A positive point is the savings. High-yield savings accounts continue to offer relatively solid returns compared to traditional bank accounts. Some experts suggest that consumers can ease budget pressures by paying off high-interest debt, negotiating better loan terms, and taking advantage of higher returns on savings. —Jessica Dickler With more negative inflation numbers on the horizon, the Federal Reserve will have to explain itself. The Fed’s big problem today is explaining why it is keeping rates steady when the inflation rate has worsened since its last meeting, and several indicators suggest more negative numbers are on the way. Start with tomorrow’s PCE price index, the Federal Reserve’s preferred inflation gauge. Both Wall Street and the Federal Reserve can use the CPI and PPI to practically lock in the change in PCE. The stock is expected to rise 0.5% in September, pushing the year-on-year rate from 3.4% to 3.7%. The Federal Reserve could look beyond that, assuming it is driven by the continued rise in energy prices. But the underlying rate is expected to increase by 0.3%, raising the annual rate by one tenth to 3.1%. Zoom In IconArrows pointing outwards What about the much-touted three-month annualized rate, which many doves have promoted as a sign that inflation is under control? It fell to 2.05% last month, nearly matching the Federal Reserve’s 2% target. It’s time to cut, right? Not so fast. If a 0.3% increase in the core is modeled, the three-month annualized rate shoots up to 2.7%. The Cleveland Fed’s inflation nowcast indicator forecasts core PCE in October at 0.25%. If that figure is modeled, the three-month annualized rate would rise to 3.24% in October. The conclusion: the indicator is so volatile that it serves as a poor guide for monetary policy. The Cleveland Fed’s trimmed mean, which removes extreme price swings from the CPI, has ranged between 2.6% and 2.7% for most of this year, showing little change. The Dallas Fed’s trimmed average has been the only one supporting a dovish stance on inflation at 2.2%. It’s worth noting, however, that Dallas Fed President Lorie Logan herself has warned that the measure may do too extreme a job of cutting inflation. Another problem facing the Federal Reserve: a seasonal pattern of inflation that spikes early in the year. Goldman Sachs expects inflation to decline next year as pressures from tariffs, artificial intelligence development and energy ease. But there are concerns that “companies could take the opportunity provided by early year price increases to pass on their higher costs, resulting in a larger ‘January effect’.” “The danger of a hold today amid current inflation pressures is that the Fed may need to do more in the coming months. TD Securities writes: “It only takes one notably bad inflation report and/or a collection of strong labor market data for the market to start pricing in higher odds of a 50 bp rate hike in the coming meetings.” —Steve Liesman Stock and Treasury yields rise as markets prepare for the Fed’s decision. In the fixed-income market, the benchmark 10-year bond added about 3.6 basis points to yield 5.03%, while the 2-year bond added 3.7 basis points to 4.774% since Kevin Warsh took over as Fed chair in May, stocks have generally fallen on Fed meeting days and then posted gains the next day, according to the Fed. DataTrek Research co-founder Nicholas Colas. The S&P 500 in particular has risen at least 1% in the three days since Warsh’s term meeting.—Jeff CoxLatest data indicates inflation pressures are intensifyingA shopper browses for items at a grocery store on October 14, 2026 in Miami, Florida.Joe Raedle | Getty Images Wednesday’s Federal Reserve decision follows a series of reports indicating that the Inflation is reaccelerating. The consumer price index for September showed that annual inflation rose to 3.7%, driven by higher energy costs. The CPI is currently on one of the longest streaks of annual readings above 2% on record. The producer price index rose to 6.3% year-on-year in September. The Fed won’t get the latest information on its preferred inflation reading, the personal consumption expenditures price index, until the September figure is released Thursday morning. Wall Street economists use the CPI and the PPI to estimate the PCE, and they expect it to rise, too. Alex Harring The Fed has a “completely new reaction function,” Miran says The Federal Reserve is following a different reaction function in setting monetary policy, according to Stephen Miran, former chairman of the Council of Economic Advisers and a bank governor. “There’s a whole new reaction function in town,” Miran said Tuesday on CNBC’s “Squawk Box.” That new reaction function is “leading them to forecast additional increases,” said Miran, who is now a senior strategist at Hudson Bay Capital. Minutes from the Fed’s September meeting showed officials anticipated another hike, but did not indicate when. Federal funds futures traders anticipate the central bank will keep rates steady on Wednesday before raising them in December. according to CME’s FedWatch tool. Miran said inflation expectations in financial markets have been “cold as a cucumber” on meeting the Fed’s inflation target. He said no one was willing to bet that the Fed was not committed to bringing inflation to its 2% target. Alex HarringGoldman expects Warsh to fall short on his guidance. Warsh The firm believes the Fed has decided to take a every-two-meetings approach to the hike, and Warsh, who is disdainful of providing policy guidance, is not likely to offer much new information. “We don’t expect significant new information from the press conference,” Goldman economist David Mericle said in a note. “The seemingly strong support for a every-two-meetings hike means there is likely a high bar for deviation from that plan through the end of the year, which should limit the impact of the Fed’s communication for now.” Furthermore, “even if the FOMC decides to change course in the future and wants to communicate this to markets, Warsh’s decision not to hint at the slower pace in his September press conference suggests he may prefer to leave that to others again,” added Mericle. Jeff Cox Economist Michael Feroli has some questions for Fed Chairman Warsh has some explaining to do when it comes to the difference between the Fed’s stance in September and October, according to Michael Feroli, chief economist at JPMorgan. Chase for USA “Chairman Warsh will have to explain why the committee increased its PCE after a result of two tenths in September, but now remains unchanged after an expected result of three tenths. Not allowing follow-up questions will not resolve the challenge,” he said in a note. “A decision to leave rates unchanged less than a week before the midterm elections that is not explained would only encourage the idea that policy is being driven by considerations other than employment and inflation.”—Jeff Cox
