Is the Federal Reserve likely to raise interest rates this week?

October 26, 2026 / 4:10 PM EDT / CBS News Add CBS News on Google The Federal Reserve is scheduled to meet this week, when U.S. central bankers will decide whether to raise interest rates for the second time this year in a bid to subdue inflation. Most economists and Wall Street analysts expect the Fed to leave its benchmark rate unchanged at 3.75% to 4% when officials release the latest policy statement on Wednesday. Consumer prices have surged this year, with headline inflation across the U.S. rising at a 3.7% annual rate in September as energy costs jumped. Core inflation, which excludes volatile energy and gas categories, rose 2.6% from a year ago amid signs inflation could be seeping into the broader economy. The Fed targets annual inflation of 2%.Gasoline prices, which have hovered above $4 a gallon for the last three months, accounted for more than half the September increase in consumer prices, according to the Labor Department."Although the latest hot inflation readings and rise in inflation expectations will concern Fed officials, they still appear broadly intent on tightening policy at a measured pace," Thomas Ryan, senior North America economist at investor advisory firm Capital Economics, said in a recent research note.In September, the Fed raised the federal funds rate — what banks charge each other for overnight loans — by a quarter of a percentage point — its first hike in three years, thereby raising borrowing costs across the U.S. economy. The Fed is scheduled to announce its latest interest rate decision at 2 p.m. ET on Wednesday.The meeting comes at a crucial time, as Americans head to the polls to cast their ballots in the midterm elections on Nov. 3. Many Americans have expressed frustration with the state of the economy as they contend with rising costs of gas, food, utilities and other expenses.Most economists and investors expect the Fed to raise rates one more time before year-end, likely at its last meeting of the year on Dec. 8-9. According to CME Group's Fed Watch tool, which uses 30-day Fed funds futures prices to predict rate decisions, traders see an 88% probability that the Fed will hold rates steady in October and a 71% probability the Fed will raise rates in December (no meeting scheduled for November).In quarterly projections last month, the Fed signaled that its rate-setting committee expected to raise rates later this year. At the same time, some Fed policymakers have signaled that the central bank is in no rush to lift borrowing costs. "With the policy action we took at our September meeting, there is no need for urgency, and we have time to gather more information," New York Fed President John Williams said in a speech at the University at Buffalo following the Fed's rate hike in September. Fed Chairman Kevin Warsh will give a press conference after this week's rate decision. Until then, investors are unlikely to get any clues from Warsh, who has argued against sharing forward guidance on rate decisions. Edited by Alain Sherter In: Interest Rates Consumer Price Index Inflation Federal Reserve Economic struggles motivate midterm voters 02:08 Economic struggles motivate midterm voters (02:08)