What Will the Fed Do This Week?

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What Will the Fed Do This Week?

It’s that time again. The Federal Open Market Committee will be meeting this week to decide whether they will raise rates again. Remember that last month, we dropped an episode just before the Fed met letting you know that the Fed Fund futures market was predicting a .25% increase. Sure enough, they did end up raising rates for the first time in 3 years. Kinda big news. And they did it because inflation continues. So, for this week’s meeting, the Fed Futures market is predicting no Fed Fund increase. But those same futures predict another .25% hike at the December meeting. It is not unusual for the Fed not to take any action just before a mid-term election, so I think that is more the reason for a pause than anything else. But our new Fed Chair is not afraid to rock the boat. If he thought that an increase at this meeting was needed, I would not put it past him to hike rates. But a couple of things have changed since their last meeting. The last employment growth headline number was weak. That would normally be one factor that might cause the Fed to pause. Also, the 10-year government bond rate has come down a bit after peaking on October 4th at 5.31% down to right around 5%. I think those two data points alone give the Fed a little room to wait. But the official inflation numbers have been worse over the last month – so I would agree there is a good chance the Fed resumes its hikes in December.

The further we go under Warsh’s leadership the more live these meetings will become. Since he is eliminating forward guidance, the market will have to come up with its own assessments rather than taking its queues from the Fed. I think this is better in the long run. Market-driven assumptions are not perfect, by any means, but the longer I do this the more I think that the market is much smarter than any one person or than any one group of people.

What does this mean for you?

Houses have gotten just a little more affordable with mortgage rates coming down just a smidge. They are generally still over 7% nationwide. Don’t play the rate game. Don’t wait to buy a home if you are convinced you are going to do it in the next couple of years. Yes, rates might be lower. But they stand just as much of a chance of being higher. So, if you can afford today’s rates, go with what you know rather than with what you don’t. If rates come down dramatically you can always refinance later. On the other hand, if you’ve been waiting to move but you’ve got a 3% mortgage and can’t afford to move, consider renovations. It’s amazing what new paint, new lighting, and new flooring can do to your living space. If you’ve been in your house a long time, there is no way you will be able to find the same amount of square footage without paying much more money. So, consider sprucing up what you already have.

Savers – consider locking in a portion of your money for a longer period of time. If you can find 5 or 6% in a treasury bond or fixed annuity for 5 years, don’t be afraid to do it. We don’t know where rates will be 1 year from now, but we do know that for savers, rates are higher right now than they have been in over two decades. Keep some money short term – but don’t be afraid to lock in great rates in the long term. If rates do happen to go down in 2027 or 2028, you will be glad you did.

Small Business Owners – Prepare for higher borrowing costs in the short term. Continue to reduce debt where you can and raise your cash reserves. Don’t be afraid of risk but be very selective about the risks you take. The margin of error is smaller when rates are higher. I think there will be a point where rates come back down, but again, I think they will never come back down to where they were.

Did you know that we have a quick and easy way you can borrow money for home renovations? If you need a new roof, you need a new A/C unit, or maybe you just want to do new paint and flooring in your living room. We can approve up to $25,000 projects for those who qualify in as little as 24 hours. It’s easy and fast. If you want to find out more, start your financial conversation with us today by visiting foundationbank.org. We hope you’ll subscribe to this podcast to it in your favorite podcast app and share it on social media. Until our next episode, God bless you.

-President Chad P. Wilson, CFP

Today’s episode of “Money Matters” was written and recorded by President Chad P. Wilson of Foundation Bank/McKenzie Banking Company on October 27, 2026. This episode does not constitute financial advice. Please consult a financial professional to discuss your specific needs. Any rates mentioned are subject to change and are accurate as of the recording date. Foundation Bank/MBC is an Equal Housing Lender, Member FDIC.