UBS: The Federal Reserve Has Never Raised Interest Rates One Month Before Midterm Elections

Golden Finance reported on September 29 that federal funds futures data indicate investors expect the Federal Reserve to raise interest rates by another 25 basis points on October 28, with the probability climbing to approximately 69%. However, UBS (America) analyst Simon Penn bluntly stated in his latest report that this aggressive bet ignores Washington's most important political operating principle. Penn pointed out that over the past 35 years since 1990, apart from the rate hike just implemented by the Federal Reserve this month (September 2026), there have only been three instances in history—2004, 2018, and 2022—where rate hikes were made during the September meeting closest to the election. After completing the historically rare fourth pre-election rate hike in September, the market is now betting on another rate hike on October 28. From UBS's perspective, this does not align with political logic. Penn emphasized that historical data shows that over the past 35 years, the Federal Reserve has never raised interest rates during its October meeting right before midterm elections. The October 28 meeting is just days away from the early November midterm election voting. If the decision-makers tighten policy again right after September's hike, creating back-to-back rate increases just before voters head to the polls, it would be tantamount to openly triggering market turmoil before the election—a political backlash no Federal Reserve has been able to withstand.