Key facts
- Fed policymakers are expected to hold interest rates steady this week.
- Inflation picked up last month and broadened beyond fuel prices.
- US economic growth accelerated last quarter, driven by consumer spending and business investment.
- The unemployment rate was 4.2% last month.
- US 10-year Treasury yields rose significantly in the weeks following the September rate hike.
- Markets are pricing a 90% chance of a hold at the Fed's October 27-28 meeting.
Federal Reserve policymakers are signaling a pause in interest rate hikes this week, but persistent inflation concerns and a robust economy suggest the pause may be temporary. Investors are closely watching for clues on future policy moves amid mixed economic signals. Data due shortly after the Fed's anticipated decision is expected to show inflation picked up last month and broadened beyond fuel prices, while economic growth accelerated last quarter, powered by consumer spending and business investment. The labor market remains stable, with the unemployment rate at 4.2% last month and weekly jobless claims running low. Analysts suggest that a sharp rise in US Treasury yields in the weeks following the Fed's September rate hike may have prompted policymakers to hold off on another increase this week, fearing it could slow the economy more than intended.