Tonight's Federal Reserve meeting preview: The "pause" in rate hikes in October is almost certain, how it will affect the probability of a rate hike in December becomes the focus

The Federal Reserve will announce its October interest rate decision at 2 AM Beijing time on the 29th. The market generally expects the federal funds rate target range to remain unchanged at 3.75%--4.00%, with a probability of maintaining the status quo at over 90%. The wording of the statement and whether Chair Waller's press conference will release more hawkish signals, as well as how this will affect the market's significantly priced probability of a 25 basis point rate hike in December, have become the focus of attention.

Goldman Sachs, Citigroup, and Credit Agricole all expect a pause in October and a 25 basis point hike in December. Goldman Sachs stated that if rate hikes continue every other meeting through 2027, a hike in March may be considered, but the baseline forecast does not expect a hike in March. Citigroup mentioned that if the stock market continues to weaken, leading to a sharp tightening of financial conditions, the likelihood of a shift to rate cuts will significantly increase. Moody's believes there will not and should not be another rate hike this week. Nomura Securities expects no change in October and stated that while the Federal Reserve guides expectations for a pause, it retains flexibility for a rate hike in December.

TD Securities expects no change in October and anticipates two more hikes in December and March. Huatai Securities expects no change in October, with two hawkish voters possibly casting dissenting votes, with the baseline scenario being one rate hike in December this year and two hikes next year. Morgan Stanley expects a 25 basis point hike in both December and March next year. Bank of New York Mellon expects rates to peak slightly above 4.5%. Bank of America believes there is ample reason to raise rates in October; if they remain unchanged, they will only retain one option for a future hike.