Fed Holds Rates at 3.88% as M2 Hits Fastest Growth of the Cycle: October CPI and FOMC Preview

Two cuts into 2026, the Federal Reserve has gone quiet, and the quiet is the story. Effective fed funds has sat pinned at 3.88% for three straight weeks, a deliberate no-move stance heading into the Oct 27-28 FOMC, while the long end of the Treasury market keeps creeping higher and the money supply keeps growing at its fastest clip of the whole cycle. That combination, a liquidity-rich economy and a term-premium-poor bond market, is a policy limbo with real consequences, and Wednesday's September CPI sits right in the middle of it.

Key Takeaways Effective fed funds has held at 3.88% since mid-September, and the market's modal expectation heading into the Oct 27-28 FOMC is that the committee p…