Most Fed officials see another rate hike as likely — Anadolu Agency
Most officials at the US Federal Reserve believe that another interest rate hike may be appropriate before the end of 2026. This was reported by Anadolu Agency, citing the minutes of the central bank's September meeting, released on October 7.
All participants in the September 15–16 meeting supported raising the target range for the federal funds rate by a quarter of a percentage point, to 3.75–4%. Officials noted that inflation remains elevated, economic activity is growing at a steady pace, and the labor market is near full employment and shows some signs of strengthening.
Risks to inflation
Almost all meeting participants assessed inflation risks as tilted to the upside. At the same time, they believed risks to the labor market had declined and had generally become balanced. Many officials considered a higher rate path a prudent step in case inflation remains above the Fed's 2% target for a prolonged period because of stronger demand or new supply shocks.
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The minutes also noted that geopolitical events had raised prices for oil and petroleum products. In the view of many participants, persistently high energy prices increase the risk that cost increases in individual sectors will spread into broader price pressures. Some officials also pointed to an investment boom in artificial intelligence, which could boost demand beyond supply in the medium term.
Financial conditions
Despite the recent rise in yields on long-term US Treasury bonds, many meeting participants considered financial conditions favorable for economic growth. They cited a substantial increase in the stock market and narrow corporate bond spreads. At the same time, several officials noted that high mortgage rates continue to restrain activity in the housing market.
Participants emphasized that they would make further decisions at each meeting based on incoming economic data, the outlook, and the balance of risks.
