Federal Reserve Expected to Hold Rates at October Meeting as Mortgage Costs Stay Near 7.4 Percent
The Federal Reserve is widely expected to pause further rate increases at its October 27-28 policy meeting, following its first rate hike since 2023 in September. The federal funds rate now sits at a target range of 3.75 to 4.00 percent. Thirty-year fixed mortgage rates are averaging around 7.4 percent, and Fannie Mae projects rates will average 7.5 percent through 2027.
The Federal Reserve is expected to hold interest rates steady at its October 27-28 policy meeting, according to investor expectations and remarks from officials including Kevin Warsh.
The Fed raised the federal funds rate to a target range of 3.75 to 4.00 percent at its September meeting, the first increase since 2023. The move was aimed at combating inflation, which rose 3.7 percent annually in September, driven largely by energy costs.
The U.S.-Iran conflict, ongoing since late February 2026, has disrupted energy markets. Attacks on tankers in the Strait of Hormuz and refinery disruptions have pushed oil and diesel prices higher, contributing to the broader inflation picture.
Thirty-year fixed-rate mortgages are averaging around 7.4 percent as of mid-October 2026. Fannie Mae has raised its 2027 forecast, projecting rates will average 7.5 percent throughout next year.
High mortgage rates have placed downward pressure on the housing market, particularly for first-time buyers. Analysts have also noted that rising interest rates significantly increase the cost of servicing the national debt, with some estimates suggesting a 1 percent Fed rate hike adds $95 billion annually to interest costs.
The FOMC's October meeting will be closely watched for any signals about the path of rates into 2027, particularly as inflation remains above the Fed's 2 percent target.
