Fed minutes: Most officials see another rate hike by year-end
Minutes from the Federal Reserve's September meeting, released Wednesday, show most officials think another rate hike will likely be needed by year-end. That matters for anyone with a credit card, car loan or mortgage. The Fed raised its key rate a quarter point to 3.75% to 4% in September, its first hike in three years.
Most Federal Reserve officials think they will need to raise interest rates again before the year ends. That is the main message of the minutes from the Fed's Sept. 15-16 meeting, which the central bank released at 2 p.m. ET on Wednesday.
"Most participants assessed that another increase in the target range for the federal funds rate would likely be appropriate by year end," the minutes said. At that meeting, the Fed voted unanimously to lift its key rate by a quarter point, to a range of 3.75% to 4%.
The minutes did not pick a month. The Fed meets twice more this year, on Oct. 27-28 and Dec. 8-9. Officials stressed that they "approached each meeting with an open mind" and that future moves would depend on new data.
Why are they worried? Officials said inflation "remained elevated" and that they had not seen enough progress in recent months, Kitco News reported. They pointed to two forces. Ongoing "geopolitical developments" have pushed up prices for crude oil and refined fuels. And a surge of spending on artificial intelligence is adding to price pressure. Several officials said the AI buildout was now doing more to lift prices for goods than tariffs were.
The Fed's own forecasts from September already pointed to one more hike. Twelve of 18 officials penciled in one more quarter-point increase this year, four saw two, and two saw none, etf.net reported. The middle forecast also shows no rate cut in 2027.
Traders had bet on an October move after strong business surveys in late September. Those bets faded last week after New York Fed President John Williams and Vice Chair Philip Jefferson signaled little urgency, SquawkNews reported. A weak jobs report on Oct. 2 also showed only 29,000 new jobs. The minutes come from a meeting held before that report.
Fed Chair Kevin Warsh said after the September hike that "this summer's inflation readings do not tell me that underlying trends have meaningfully improved."
The October meeting comes one day before the next inflation report from the PCE index, due Oct. 29. The October jobs report follows on Nov. 6.
What we know: Most Fed officials expect one more hike this year.
What we don't: Whether it comes in October or December.
Where outlets agree Kitco News and etf.net both quote the minutes saying most officials saw another hike as likely by year-end, after a unanimous quarter-point move to 3.75% to 4%.
Where they differ The minutes do not choose October or December, and SquawkNews notes top Fed leaders have recently signaled little urgency to move this month.