Fed Minutes Show Most Officials Expect One More Rate Hike This Year, With No Rush to Move in October
Minutes of the Federal Reserve's September meeting, released Wednesday, show officials united behind last month's rate increase and most expecting one more hike by year-end, but in no hurry to act at the October meeting.
Federal Reserve officials expect to raise interest rates one more time this year but see no urgency to do it this month, according to minutes of the central bank’s September meeting released Wednesday.
All 19 top officials backed the September decision to lift the benchmark rate to a range of 3.75% to 4%, the Fed’s first increase since July 2023, according to the minutes. Most officials’ projections pointed to one additional quarter-point increase across the two remaining meetings of 2026, in October and December, while a small number penciled in hikes at both meetings.
A hike framed as insurance against sticky inflation
Officials differed on why the September move was needed. Many described it as insurance against the risk that inflation runs above expectations, while others said the current inflation outlook itself justified higher rates, according to the minutes and coverage by The Wall Street Journal and MarketWatch. The minutes said participants judged the move would support a more timely return of inflation to the Fed’s 2% goal.
Policymakers pointed to several sources of price pressure, including fuel costs linked to the war with Iran, a surge in AI-related investment, and the Trump administration’s tariffs. Fed staff raised their inflation forecast for 2026 through 2028 compared with July and now expect inflation to reach the 2% target in 2029.
Markets see December, not October
The minutes gave no sign of a plan to move again at the Oct. 27-28 meeting. That reading matches recent public comments: New York Fed President John Williams has indicated there is no need for urgency, and a softer-than-expected September jobs report left expectations for an October pause intact. According to the Fed’s own projections, most officials view one more increase as the last needed, followed by a hold and then gradual cuts starting in 2028, MarketWatch reported.
Investors are pricing in somewhat more tightening than the Fed has forecast. Inflation reports due next week could shift those expectations before the October meeting.
Reporting based on coverage by The Wall Street Journal and MarketWatch.
