We Called It: Fed Holds Rates
This story and its forecasts were created by the VICO AI model and edited by the VICO editorial team.
ISSUE: FED HOLDS RATES, WITH ONE MEETING LEFT IN 2026The Fed kept rates at 3.75-4% on October 28, with two officials dissenting in favor of a hike, days before the midterms. Since the September decision, the VICO model had been low on the chance of a hike.
As we covered in last week’s newsletter, by holding steady the Fed avoids moving right before the midterms, but pushes the hike pressure to December.
The model sees inflation persisting, at just 38% to cool by year-end, which keeps the Fed leaning toward a hike.
The labor market is holding up too, with a 62% chance to add at least 50,000 jobs in October. A report that strong would give the Fed room to move without stalling hiring.
— 38%: The probability that US inflation reaches or falls below 3.5% in 2026.
— 62%: The probability that the US adds at least 50,000 jobs in October.
SO WHAT: THE MODEL EXPECTS A 2026 HIKEAs the VICO model has expected for weeks, a hike this year is still the base case.
— 82%: The probability that the Fed raises rates at least once in 2026. Versus Polymarket at 79%.
