Summary We expect that the Federal Open Market Committee (FOMC) will keep the target range for the federal funds rate unchanged at 5.25%-5.50% during its next meeting on November 1. Financial markets are also priced for no change. Despite strong GDP growth, inflation is moving back toward the FOMC’s target of 2%. We believe the post-meeting statement will continue to characterize inflation as “elevated” and acknowledge the uncertainty brought by recent geopolitical events. Most policymakers are comfortable with leaving monetary policy unchanged at the upcoming meeting, but they indicated in September that another rate hike by the end of the year would be appropriate. The FOMC will likely maintain language signaling the possibility of further tightening. We do not anticipate any changes to the pace at which Treasury securities and mortgage-backed securities are being allowed to run off the Fed’s balance sheet.
