The Federal Reserve is expected to leave interest rates unchanged at its upcoming October meeting — even as higher energy costs complicate the inflation outlook and put additional pressure on household budgets.

The consumer price index , a broad measure of inflation, rose again in September, bringing the annual inflation rate up to 3.7%. Surging oil prices stemming from the U.S. war with Iran also helped drive September's producer price index higher. On Friday, Brent crude oil was trading at a five-month high before falling slightly.

The Fed raised rates by 25 basis points to a range of 3.75% to 4% last month, its first hike since 2023 . But fed funds futures last priced in less than a 10% chance the central bank will raise rates by another quarter point at its meeting this week, according to the CME Group's FedWatch tool. Nearly 75% expect at least one hike by year-end.

"Inflation is still the No. 1 problem in the U.S.…