The economic expansion has advanced from the initial recovery, and the focus is now on metrics the Federal Reserve is looking at to gauge the health of the economy. Since the Fed’s dual mandate is to keep prices stable and maximize employment, we will focus on labor and inflation metrics, keeping in mind the broader economic impact as well. We created a Fed Monitor to track some of the data points that will impact the Fed’s decisions to tighten financial conditions. Additionally, we try to quantify the data and information outside of the dashboard to determine if the Fed is being more dovish than the data, and likely to be more aggressive in the future, or if they are being hawkish relative to the data, and likely to be more conservative in the future.

The Federal Reserve’s rate hiking cycle began in September, and it’s still unclear whether another rate hike will follow at the late October FOMC Meeting. Several notable Fed officials have pumped the brakes on expectations for an October hike. Waiting until the December meeting would give the Fed more inflation and labor data to assess before deciding on another hike this year. The Fed may feel less urgency to move rates just days before the midterm elections. However, September’s hotter-than-expected core CPI and PPI readings give the Fed’s more hawkish members a stronger case for raising rates at consecutive FOMC meetings.

The labor market continues to show steady, though subdued job growth. The unemployment rate is 4.2%, down from its year-to-date high of 4.4% in February. Job growth has averaged about 68,000 per month through the first nine months of 2026, but layoffs remain very low. Stability in the labor market is allowing the Fed to shift its focus to inflation. Price pressures heated up in September. Headline CPI inflation rose 0.6% month-over-month, driven by a sharp jump in energy prices. Core CPI rose 0.3% on broad-based pressure and has climbed at a 3.4% annualized rate over the past three months.

An October rate hike remains on the table, but the Fed may take a more patient approach and wait until December for a second hike so it can assess more data. A late-October hike isn’t our base case, but it can’t be ruled out. Fed funds futures currently imply 30% odds of an October hike. For now, we are keeping the Fed-O-Meter dial in its current position.