What September CPI's 3.7% Means for the Fed's Oct. 28 Decision

Consumer prices rose 3.7% in the 12 months through September, up from 3.4% in August, and core inflation rose to 2.6% from 2.4%, the Bureau of Labor Statistics said Wednesday, Oct. 14. It is the last CPI report before the Federal Reserve announces its next rate decision at 2 p.m. ET on Oct. 28, and both measures came in above forecasts.

What did September CPI show?

Energy did most of the work. The gasoline index rose 9.1% in September, "accounting for over half of the monthly all items increase," the BLS said. Energy prices were up 20.4% from a year earlier.

September 2026 CPI	1 month (seasonally adjusted)	12 months	Forecast (12 months)
All items	+0.6%	+3.7%	3.6%
Core (less food and energy)	+0.3%	+2.6%	2.5%
Energy	+5.2%	+20.4%	—
Shelter	+0.4%	+3.2%	—

Sources: Bureau of Labor Statistics; forecasts as reported by Kiplinger.

The core reading matters more for the Fed. Core prices rose 0.3% for a second month, while economists had expected 0.2%, Kiplinger reported. Shelter rose 0.4%, after 0.3% in August, and airline fares rose 1.2%.

Will the Fed raise rates again on Oct. 28?

The data do not settle it, but they strengthen the case officials made in September. The Fed raised its target range by a quarter point to 3.75% to 4% on Sept. 16, saying "inflation remains elevated." Minutes of that meeting say "most participants assessed that another increase" in the range "would likely be appropriate by year end." Officials also said they "approached each meeting with an open mind," with decisions depending on incoming data.

After the release, Trading Economics said the report "strengthened expectations of another Federal Reserve rate hike this month," putting the probability at around 50%, up from about 22% before the data. That pricing can shift quickly. In reactions compiled by Kiplinger, Jeff Schulze of Franklin Templeton Institute said "September's print was likely not sufficient for the Fed to execute back-to-back increases at the October FOMC meeting," while Dustin Thackeray of Crewe Advisors said "a second consecutive hike is firmly on the table."

The minutes also showed concern that energy costs could spread. "Many participants assessed that the longer energy prices remained elevated, the greater the risk that cost increases in certain sectors could lead to broader price pressures," the minutes say. In September, core prices rose with gains in shelter, recreation, used cars and airfares, the BLS said, though the communication index fell.

The Fed targets a different gauge, the personal consumption expenditures price index, not CPI. After September, the remaining 2026 meetings are Oct. 27–28 and Dec. 8–9; see our FOMC meeting schedule for 2026 and 2027 for every date and decision.

How did Treasury yields react?

Updated 4:55 p.m. ET: The early jump did not hold. The 10-year yield closed at 5.19% on Oct. 14, down 2 basis points from Tuesday, while the 2-year closed at 4.82%, up 3 basis points, according to the Treasury's daily par yield curve. The 5-year closed unchanged at 5.00%. Our afternoon data brief on the Treasury curve after CPI has the full table.

In the morning, yields rose quickly. The 10-year yield was about 5.19% at 8:29 a.m. ET, just before the release, and about 5.29% at 8:38 a.m., according to Yahoo Finance quotes. The 5-year yield rose to about 5.12% from 4.98% over the same minutes. Both were above Tuesday's Treasury closes of 5.21% and 5.00%. These are early intraday levels, not closing yields, and we could not verify an intraday 2-year quote.

That reverses Tuesday's dip, covered in our brief on Treasury yields before CPI. The full August baseline is in our September CPI preview, and officials' recent comments are in Fed speakers this week.

Intraday yields are approximate and were taken at about 8:38 a.m. ET on Oct. 14.

Update, Oct. 14, 2026: Added Oct. 14 Treasury closing yields. Replaced pre-release analyst comments from UBS and Capital.com, which no longer appear on the cited Kiplinger page, with post-release reactions from the same roundup and post-release rate-hike odds reported by Trading Economics.