NEWS AND INSIGHTS | INSIGHTS

CIO Notebook: Fed Holds Rates Steady, Cites the Need for More Information

October 29, 2026
Shannon L. Saccocia, CFA, Chief Investment Officer—Wealth

We view this month’s tone as more dovish than September. A December hike remains highly probable, while 2027 pricing implies slightly lower odds of further hikes.

As expected, the Federal Open Market Committee (“FOMC”) maintained the fed funds target rate at 3.75% to 4.00%. Beth Hammack and Lisa Cook both dissented, preferring a 25-basis point hike. The statement reflected a slight change as it relates to economic activity, stating it is growing at a “strong” pace versus last month’s “solid” pace. More notably, the statement included an acknowledgment that “the accumulation of more information will help the Committee determine the policy stance” necessary to get to its 2% inflation target.

During the press conference, Fed Chair Kevin Warsh continued the theme from September’s meeting, citing geopolitical events as a driver of uncertainty, strong U.S. GDP led by healthy consumer spending and accelerating business investment, and a labor market that reflects both lower unemployment rates and claims. He reiterated the responsibility of the FOMC to commit to a “timely return” to the inflation target and cited evidence of tightening financial conditions following September’s hike, notably greater discernment in capital allocation decisions.

He also spent several minutes describing the Fed’s “new monetary medicine” – a doubling down on the 2% inflation target, a responsibility to deliver on that target apart of exogenous factors (perhaps referring to fiscal policy and geopolitical uncertainty), and a new framework for how the FOMC thinks monetary policy and its transmission should operate prospectively. The Fed’s role in Warsh’s terms is to “interrogate reality”, with an emphasis not on a fixed individual date or isolated data point, but on delivering price stability through clear objectives and strategy.

Warsh chose the press conference to lay out the new meeting cadence for 2027 and 2028. The FOMC will continue to meet eight times a year, but in 2027 and 2028, one and two meetings respectively will be focused on broad strategic discussion and therefore will not yield monetary policy action and/or a statement from the Committee. While changes to the Fed’s calendar were anticipated, the decision to release the new schedule ahead of the findings of the five new task forces was somewhat surprising.

In our view, the overall tone of the press conference was more dovish than September. While the probability of a rate hike in December remains very high, a look ahead to 2027 reflects a slightly lower probability of further hikes. The “information rich” period from now through the December meeting seems particularly important in determining the rate of hikes. In addition, the multiple references to tightening of financial conditions may indicate that the Fed is increasing its reliance on real-time data, and the references to correlations point to both economic and market data as relevant to the Fed’s analysis. Guidance, however, was difficult to glean; if anything, the Fed’s reaction function appears to be a work in progress, and that could translate to greater volatility in the short term even as the Fed attempts to move away from a role as market maker during Warsh’s tenure.

Stocks were modestly higher and short-term yields drifted lower following the meeting. The first of the major data points likely to color the Fed’s December decision comes tomorrow, with the release of September PCE; non-farm payrolls for October follow next Friday. In addition, with the filing of Anthropic’s S-1, and equity and debt issuance related to AI buildout continuing at a steady pace, the potential for tighter conditions and liquidity to weigh on the narrative remains a concern coming into the final two months of the year. We have shifted to a modestly more conservative stance ahead of this period, decreasing our U.S. small-mid cap and emerging market equity exposure while leaning into U.S. large cap and Japan. In fixed income, we have trimmed duration and kept credit exposures near target levels. In private markets and alternatives, we have added to commodities and are holding private equity and private debt at target.

IMPORTANT INFORMATION:

Economic and market data is sourced from FactSet unless stated otherwise.

This material is provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. This material is general in nature and is not directed to any category of investors and should not be regarded as individualized, a recommendation, investment advice or a suggestion to engage in or refrain from any investment-related course of action. Any views or opinions expressed may not reflect those of the firm as a whole. Neuberger products and services may not be available in all jurisdictions or to all client types. Diversification does not guarantee profit or protect against loss in declining markets. Investing entails risks, including possible loss of principal. Investments in private equity are speculative and involve a higher degree of risk than more traditional investments. Investments in private equity are intended for sophisticated investors only. Unless otherwise indicated, returns shown reflect reinvestment of dividends and distributions. Indexes are unmanaged and are not available for direct investment. Investing entails risks, including possible loss of principal. Past performance is no guarantee of future results.

Portfolio positioning views expressed herein are those of Neuberger’s Wealth Investment Group, which may include those of the Neuberger’s Asset Allocation Committee. Asset allocation and positioning views are based on a hypothetical reference portfolio. The Wealth Investment Group analyzes market and economic indicators to develop asset allocation strategies. The Wealth Investment Group works in partnership with the Office of the CIO. The Wealth Investment Group also consults regularly with portfolio managers and investment officers across the firm. The Asset Allocation Committee is comprised of professionals across multiple disciplines, including equity and fixed income strategists and portfolio managers. The Asset Allocation Committee reviews and sets long-term asset allocation models, establishes preferred near-term tactical asset class allocations and, upon request, reviews asset allocations for large, diversified mandates. Asset Allocation Committee members are polled on asset classes and the positional views are representative of an Asset Allocation Committee consensus. The views of the Asset Allocation Committee and the Wealth Investment Group may not reflect the views of the firm as a whole and Neuberger advisers and portfolio managers may take contrary positions to the views of the Asset Allocation Committee or the Wealth Investment Group. The Asset Allocation Committee and the Wealth Investment Group views do not constitute a prediction or projection of future events or future market behavior. Defensive positioning generally means an underweight bias on allocations to risk assets such as equities and alternatives. Positioning views may change over time without notice and actual client positioning may vary significantly. Discussion of yield characteristics or total returns of different asset classes are for illustrative purposes only. Such asset classes, such as equities and fixed income, may have significantly different overall risk-return characteristics which should be consider before investing.

The information in this material may contain projections, market outlooks or other forward-looking statements regarding future events, including economic, asset class and market outlooks or expectations, and is only current as of the date indicated. There is no assurance that such events, outlook and expectations will be achieved, and actual results may be significantly different than that shown here. The duration and characteristics of past market/economic cycles and market behavior, including any bull/bear markets, is no indication of the duration and characteristics of any current or future be market/economic cycles or behavior. Information on historical observations about asset or sub-asset classes is not intended to represent or predict future events. Historical trends do not imply, forecast or guarantee future results. Information is based on current views and market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons.

Discussions of any specific sectors and companies are for informational purposes only. This material is not intended as a formal research report and should not be relied upon as a basis for making an investment decision. The firm, its employees and advisory accounts may hold positions of any companies discussed. Nothing herein constitutes a recommendation to buy, sell or hold a security. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. Investment decisions and the appropriateness of this content should be made based on an investor's individual objectives and circumstances and in consultation with his or her advisors.

Neuberger Investment Advisers LLC is a registered investment adviser.

The “Neuberger” name and logo are registered service marks of Neuberger Berman Group LLC.