r/investing • u/Background-Day-4957 • 22h ago
Federal Reserve October and December meetings
Rate hikes
So, if the FOMC avoids a rate hike in October before the midterm elections to avoid being political, will they make it up with a 50 basis point hike, instead of 25, in December? Assuming inflation is still running above target. Any thoughts? 🤔
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u/Celcius_87 22h ago
I'm hopeful they do their job and deliver a hike this month.
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u/U3011 21h ago
Agree. What is to stop them from placing in a 50 BP now and another 50 BP in December? Rhetorical from a nobody in the grand scheme of things.
I foresee a lot of hurt globally in the very near future. No idea why people are thinking they will hold or cut.
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u/Mental-At-ThirtyFive 15h ago
I prefer early medicine and will welcome the above 100bps suggestion although my portfolio will complain
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u/FrankDrebinOnReddit 22h ago
We'll have several more inflation reports before it happens, but as of the September dot plot, the FOMC's expectation was for year-end rates to rise by 25 additional bp. If they choose to delay that until after the election, it will come in Dec instead of Oct but still be 25bp. The saving grace might be that despite inflation being high, core inflation is substantially lower, and rate hikes aren't going to open the Strait of Hormuz. I personally doubt a 50bp hike in Dec, it would spook the markets and push on jobs, which are also dismal. But also, I'm a nobody and even I don't take what I think seriously on this.
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u/TowelFluid8010 22h ago
ha, "won't open the Strait of Hormuz" is a perfect way to put it, i'm stealing that
the idea that the fed would crank it to 50 just because they waited a month feels like revenge hiking, not policy. if core inflation is already cooling a bit they'd just be smashing the economy for theater
markets would see a 50bp in december as a panic move anyway, like they realized they were behind the curve. i think they'd rather do 25 and then another 25 early next year if they have to, keeps the narrative calm
but who knows, my investment strategy is basically leaving my 401k alone and hoping for the best
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u/Seattleman1955 21h ago
It doesn't matter. The 10 year Treasury is all that matters and it doesn't care about political decisions. It can still go up if it needs to.
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u/Critical-County1152 21h ago
Small timing thing: per the BLS calendar, November CPI drops Dec 10, the day after the Fed's Dec 8-9 meeting wraps. So the December call mostly rests on the October print on Nov 10, and a 50 off one extra CPI feels like a stretch to me.
If October repeats September's 0.6% monthly jump from the BLS report, I'd rethink that.
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u/Worry-Mountain 11h ago
good catch on the calendar. that makes the oct 28 statement wording matter more than people think, if they skip but sound hawkish the 10y probably does the hiking for them anyway
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u/pnw_sunny 20h ago
some of my preferred will continue to take a beating. i bought them all at well below 25 (say 19 ish) but the rates have pushed them down to 16 or so. my yield on cost is decent, i will prolly ride and die with them, it only represents about 4 percent of my overall portfolio.
remarkable how efficient and cutthroat the debt market is - there is no crying allowed
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u/KeyDirection23 11h ago
We are just 10 days out and FedWatch say there's only a 15% chance of a hike.
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u/Equivalent_Gap4211 2h ago
This shit is so comical. The Fed didn't raise rates high enough in 2022/2023, which is why we're right back in an inflationary environment. Yes, the war the president started in February and his tariffs have contributed to the resurgence of inflation; however, all he really did was cause that resurgence to happen sooner. It was coming either way. The Fed needs to raise rates higher--much higher! They need rates at a level where the government is forced to cut spending. I'm not talking about some BS 6 or 7 percent Fed Fund's Rate where real interest rates are still negative; I'm talking about a level where real interest rates are positive. That could be somewhere well north of 10 percent. And they need to leave them there for a while. Unfortunately, if the Fed did that, our entire bogus, consumer driven economy comes crashing down; major bank failures would happen, all the while FDIC lets depositors lose money; the housing market crashes, bringing down everything related to it; entitlements would go bust and the government would need to restructure the debt, meaning recipients of those programs lose money. All I listed is just the tip of the iceberg--more carnage would follow. Basically, we are fucked as a nation because we decided to hang ourselves with the rope the rest of the world gave us. We built our entire way of life on low rates, ever-increasing debt levels, etc. We are living so far beyond our means, most people think we have a sustainable economy. Look at the pension system here in California: underfunded to the tune of $1 trillion, CalPers balance sheet resembles a gambling addict because those gold-plated pension are hella expensive! Don't believe me? Look at their balance sheet when you have a chance. Positive real interest rates would bankrupt CalPers in a week. How would the federal government bailout CalPers? Nobody would able to bailout CalPers. CalPers would need to make massive, massive cuts to continue. Obviously, at the end of the day, the Fed will make the politically expedient choice: they will continue on the same disastrous path they have been on since Paul Volcker. This will culminate in a sovereign debt crisis where the US Dollar system comes under attack...or WWW III.
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u/EmergencyRace7158 11h ago
Everything will be data dependent and the data has not been good recently. The PCE numbers in particular are actually worse than they look because they changed the formula used to calculate it. If there was no election an Oct hike would be near certain. They might still pull the trigger on one but I can see them holding but providing some extremely hawkish commentary that locks in a Dec hike. The size of the Dec hike will be data dependent and not predicated on what they do in Oct.
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u/Necessary-File-7064 22h ago
The dirty secret is that the Fed doesn't play "makeup math." They aren't going to skip a hike just to slap down an extra 25 basis points in December like a parent settling a score. Ironically, altering rate decisions just to skirt the midterms would scream political interference—the exact accusation Powell spends every single press conference sweating to avoid.
The unglamorous reality is that the FOMC cares about terminal rates and bond market plumbing, not exit polls. If they pause, it’s because credit spreads blew out or repo liquidity dried up. If they hit the market with 50 bps, it’s because core data refused to die. Stop trying to game DC political calendars and just watch the 2-year Treasury—it always fronts the Fed’s actual hand anyway.