What's next if the Fed skips October?

The benefit for the Fed from pausing in Oct and hiking at a quarterly pace is that it will have more time to assess the data and determine how far to go. The cost is that the Fed risks falling behind the curve given the booming nominal economy. The Fed also seems to be spooked by the long-end selloff, but it isn't clear if pausing or hiking would be better for the bond. Slower hikes could mean more hikes, but the hiking cycle might also end after Dec if y/y PCE inflation slows significantly due to favorable base effects in 1Q. BofA's view since June has been three consecutive hikes in Sep, Oct and Dec. Core CPI likely slowed to 0.2% m/m (2.5% y/y) in Sep, with headline CPI spiking 0.6% due to higher gas prices. Core PCE inflation is estimated at 0.22% m/m and 3.0% y/y. 3Q 2026 GDP tracking was raised from 2.4% to 3.5% q/q saar, lifting the 4Q/4Q 2026 growth projection from 2.3% to 2.6%.