# US inflation stayed low as Fed held rate at 4.25%

*Economics. 37% certain. Sunday, 31 January 2027*

> Speculative fiction assembled from prediction-market prices. This has not happened.

**US annual inflation hit 3.6% and the ECB kept rates unchanged.**

On Sunday, the United States reported annual consumer price growth of 3.6% for September, keeping inflation modest. The Federal Reserve kept its policy rate unchanged at 4.25% after an October meeting that made no adjustment and after a year with no cuts. Meanwhile, the European Central Bank also left its rates unchanged in October, and the US economy avoided a recession through the end of 2026.

Throughout 2026 the central bank recorded zero rate cuts, maintaining the stance taken after the previous year's tightening cycle. This policy pause coincided with the absence of any recessionary signal in the US labor and output data by the close of the year.

Across the Atlantic, the ECB's October policy review resulted in no change to its deposit, main refinancing, or marginal lending facilities. The unchanged stance mirrored the Eurozone's inflation trajectory, which had not triggered a need for further tightening. The European central bank's decision therefore aligned with the broader trend of stable monetary policy in major economies.

In South America, Argentina reported monthly inflation for September between 1.9% and 2.1%, indicating a low and contained price environment. These figures contrasted with the United States' 3.6% annual rate but both remained within ranges that policymakers deemed manageable.

Overall, the combination of steady inflation readings and unchanged policy rates suggested that major central banks were comfortable holding rates steady. The US economy's resilience, reflected in the lack of a recession, reinforced the view that the current monetary stance could be sustained.

## Analysis

The concurrent stability of inflation in the United States and the euro area removed the immediate impetus for further monetary tightening.

The United States avoiding a recession through 2026 strengthens the case for maintaining the current policy stance. Without a downturn, the Fed faces less pressure to lower rates to support growth, and the absence of recessionary signals reduces the risk of a rapid policy shift, though future shocks could alter this balance.

While the figures differ from the United States, the shared characteristic of manageable inflation may help these economies sustain growth without resorting to aggressive monetary easing or tightening.

Nevertheless, the outlook remains contingent on upcoming data.

### Background consulted for the analysis

- [Fed predictions for 2026: Will a rate hike happen by the end of the year?](https://finance.yahoo.com/personal-finance/banking/article/fed-rate-predictions-2026-154647304.html)
- [What’s The Fed’s Next Move? | J.P. Morgan Global Research](https://www.jpmorgan.com/insights/global-research/economy/fed-rate-cuts)
- [FedWatch - CME Group](https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html)
- [Fed Rate Forecast 2026: How Many Cuts? When Will Rates Go Down? │ PrimeRates](https://primerates.com/primerate/fed-rate-forecast-2026/)
- [Key ECB interest rates - European Union](https://www.ecb.europa.eu/stats/policy_and_exchange_rates/key_ecb_interest_rates/html/index.en.html)
- [Monetary policy decisions - European Central Bank](https://www.ecb.europa.eu/press/pr/date/2026/html/ecb.mp260910~314e508016.en.html)

## What this was built from

- **Argentina Monthly Inflation - September**: 1.9 to 2.1%, 65%; settles Tuesday, 13 October 2026 (polymarket, futuur). [Market](https://polymarket.com/event/argentina-monthly-inflation-september-2026)
- **September Inflation US - Annual**: 3.6%, 49%; settles Thursday, 15 October 2026 (polymarket). [Market](https://polymarket.com/event/september-inflation-us-annual)
- **September Inflation US - Monthly**: 0.5%, 37%; settles Thursday, 15 October 2026 (polymarket). [Market](https://polymarket.com/event/september-inflation-us-monthly)
- **Fed Decision in October?**: No change, 83%; settles Thursday, 29 October 2026 (polymarket). [Market](https://polymarket.com/event/fed-decision-in-october-20260617190323537)
- **ECB Interest Rates: October 2026**: No change, 92%; settles Friday, 30 October 2026 (polymarket). [Market](https://polymarket.com/event/ecb-interest-rates-october-2026-20260723225848778)
- **How many Fed rate cuts in 2026?**: 0 (0 bps), 94%; settles Friday, 1 January 2027 (polymarket). [Market](https://polymarket.com/event/how-many-fed-rate-cuts-in-2026)
- **US recession by end of 2026?**: No, 93%; settles Sunday, 31 January 2027 (polymarket, manifold). [Market](https://polymarket.com/event/us-recession-by-end-of-2026)
- **What will the Fed rate be at the end of 2026?**: 4.25%, 66%; settles Friday, 1 January 2027 (polymarket). [Market](https://polymarket.com/event/what-will-the-fed-rate-be-at-the-end-of-2026)