US inflation ticked up to 3.0% year over year in September, and futures markets still price a Federal Reserve rate cut next week.
Headline CPI printed 3.0% on the year and 0.3% on the month, while core CPI held at 3.0% year over year and 0.2% month over month. Gasoline rose 4.1% on the month and shelter inflation stayed near 3.6%. The Bureau of Labor Statistics published on schedule to meet Social Security cost-of-living timelines despite the shutdown backdrop.
Rates traders barely shifted course after the report.
CME Group’s FedWatch shows futures place the probability of a 25 basis point move at the October 29 FOMC above 90%, taking the target from 3.75% to 4.00% today toward 3.50% to 3.75%.
Beyond the immediate meeting, the same FedWatch distribution puts the center of the path near 3% by this time next year.
For the October 28, 2026 meeting, the highest probabilities sit in the 2.75% to 3.25% ranges, with modest tails on either side.
A simple probability-weighted midpoint of that distribution is about 2.97%, which is consistent with a glide from current levels to roughly 3% over the next year.
| Target range (%, Oct 28, 2026) | Probability< |
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Author: Liam ‘Akiba’ Wright
