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Posted October 27, 2026 at 1:20 pm
There’s just a 7% chance that the Federal Reserve will hike its key benchmark tomorrow, but the probability for a December lift is at 75%, according to Interactive Brokers IBKR Prediction Markets. The Fed is poised to communicate a patient approach on monetary policy at tomorrow’s interest rate decision, as there’s little evidence that elevated energy costs are spreading to the broad economy. While inflation is well above the committee’s 2% target, core readings of price pressures that exclude gasoline are much closer to the objective than the overall headline, and that 110 basis points spread between the two offer the central bank additional breathing room as it waits for a potential Middle East resolution. Furthermore, the Treasury market has turned somewhat dovish in the past few weeks, as AI slowdown concerns have manifested onto the curve, allowing Chair Warsh to take both sides of the dual mandate increasingly into consideration, rather than overly focusing on the cost stability aspect. Additionally, waiting to see the impacts of the September quarter-percent increase is another reason to sustain a milder stance instead of turning to a restrictive one. Finally, October raise possibilities are hampered by next week’s midterm elections, as the institution would likely want to stay out of the political conversation ahead of the results, which are widely expected to feature a blue sweep.
The Bank of Canada is expected to raise rates tomorrow for the first time this year, as the committee seeks to block elevated energy costs from spreading to the overall economy. Additionally, ongoing growth amidst subdued unemployment in recent months has policymakers less worried about recession risks and more concerned about higher-than-target inflation. Participants within the Interactive Brokers Prediction Markets see an 82% chance of a quarter-point increase, which is a stark contrast from the middle of the month, when the odds were between 10 and 20%.
Source for images: Interactive Brokers Prediction Markets.
Note: Prices are highest bids as of the morning of October 27, 2026.
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