According to the Federal Open Market Committee (FOMC) meeting minutes released on Wednesday in Washington, covering the September 15–16 meeting, all 19 Fed officials supported the decision to raise interest rates, with many citing concerns about the risk of rising inflation pressures.
Another group of officials stated that raising rates was necessary based on their economic outlooks, signaling growing unease over high inflation. The minutes noted: “Most participants judged that another increase in the target range for the federal funds rate before year-end would be appropriate.”
At last month’s September meeting, FOMC members unanimously approved a 0.25 percentage point hike in the benchmark interest rate target range to 3.75%–4%, marking the first rate increase since July 2023. The move came amid signs of accelerating overall economic growth.
The minutes also indicated that “several participants noted that underlying momentum in the economy appeared to have strengthened.”
The record further showed that financial conditions were discussed. Many officials commented that although long-term Treasury yields had recently risen, “financial conditions appeared supportive of economic growth, with stock prices having surged significantly this year and corporate bond spreads remaining narrow.”
However, since the September meeting, a series of remarks by several key Fed officials has suggested the central bank may not be eager to act again soon.
Federal Reserve Vice Chair Philip Jefferson and New York Fed President John Williams both spoke last week, indicating they believe the Fed has time to assess the economic situation before considering another rate hike. Investors subsequently lowered expectations for a rate increase this month.
Currently, interest rate futures markets show less than a 20% probability of another rate hike at the October meeting.
While Williams and Jefferson’s recent comments do not mean the Fed will not adjust policy further, some hawkish officials continue to warn of persistently high inflation. Consumer price data due on October 14 could reignite calls for an imminent rate increase.
