President Trump did this. I discuss five Reasons.
CME Fedwatch probabilities for Oct 2026.
October 28 Meeting Synopsis
90.7 percent chance of Fed standing pat
8.1 percent chance of a quarter-point hike
0.1 percent chance of a two quarter-point hikes
1.1 percent chance of a quarter-point cut
Rate Hike vs Cut Likelihood
The probability of any hike (quarter-point or two quarter-point) is 8.1% + 0.1% = 8.2%.
The probability of a cut (quarter-point) is 1.1%.
A hike is therefore 8.2 / 1.1 ≈ 7.45 times as likely as a cut.
That’s one way of slanting the observation given the odds of the Fed doing nothing is 90.7 percent.
I captured CME Fedwatch weighted target probability 5 minutes before the meeting and again today.
Weighted Average CME Fed Target Rate Probabilities
Changing December 2026 Target Rate Odds
February 24: 3.07 percent
March 3: 3.15 percent
March 12: 3.45 percent
March 18: 3.42 percent
March 19: 3.64 percent
The March 18 numbers are about 5 minutes before the March FOMC meeting.
The March 19 numbers are 11:30 AM Mountain Time.
The Fed meeting and the press conference effectively put the expectation of a change by the Fed on hold for the entire rest of the year.
Five Reasons to Blame Trump
Tariffs.
Deficit Spending and the One Big Beautiful Bill Act.
Iran war pushed up the price of oil. There is no estimate when it will end, or even what the goals are.
It’s not just oil. Fertilizer, Natural gas, aluminum, and other commodities are impacted. Natural gas and fertilizer will impact agriculture. Knock-on impacts are everywhere.
Trump now wants another $200 billion or more to fund the war he just started. More deficit spending will pressure rates.
All five points are inflationary. Tariffs are also recessionary.
At the FOMC press conference, Powell specifically pointed out tariffs. But he stated uncertainty about tariffs and literally everything else too, including AI and energy.
Powell thinks services inflation is under control. I don’t and the latest Producer Price Index reports don’t either.
Observation of the Day
A Fed that admittedly knows nothing is unwilling to do anything.
But consider the bright side. Trump says “Look at all the money we are making” after pledging to reduce energy bills in half and starting no more wars.
Flashback January 20, 2026: Might the Next Interest Rate Move by the Fed Be a Hike?
It’s time to discuss the real possibility of a renewed surge in inflation.
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