Fed minutes: most FOMC participants back another rate hike before year-end
In short
The US Federal Reserve on October 7 released minutes of its September 15-16 FOMC meeting, at which it raised rates by 0.25 point to 3.75-4.00%, its first hike since July 2023. Most participants said a further rate increase by the end of the year would be appropriate, citing upside inflation risks from higher fuel prices. According to Mainichi Shimbun, no participant signalled a consecutive hike at the October 27-28 meeting.
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The US Federal Reserve on October 7 published the minutes of the Federal Open Market Committee meeting held on September 15-16. Jiji Press reported that a large majority of participants said an additional rate hike by the end of the year would be appropriate, while Mainichi Shimbun quoted most participants as saying a further hike within the year was 'likely to be appropriate'. NHK's headline also reported broad support for further hikes. [ 1 , 2 , 3 ]
At that meeting the Fed raised its policy rate by 0.25 percentage point, its first increase in three years and two months, since July 2023. Jiji Press reported the new range at 3.75-4.00%. Both Jiji Press and Mainichi Shimbun said the decision was unanimous; Mainichi said the aim was to bring inflation down to the 2% target. [ 1 , 3 ]
Participants voiced concern about upside risks to prices. Jiji Press linked this to higher oil prices tied to the US-Iran conflict and noted that the 2% inflation target has not been met for more than five years. According to Mainichi Shimbun, members cited the Middle East situation, which has driven up gasoline and diesel prices, and a surge in AI-related investment as factors pushing prices higher. Many said that the longer energy prices stay high, the greater the risk of broader inflationary pressure, and some said inflation risks had tilted further to the upside in recent months. [ 1 , 3 ]
Participants stressed that they are approaching policy flexibly, meeting by meeting, and that any further hike would depend on incoming information and its effect on prices, Mainichi Shimbun reported. The paper found no views in the minutes suggesting a consecutive hike at the next meeting on October 27-28. [ 3 ]
Mainichi Shimbun added that Fed officials have recently said there is no need to rush rate increases, and that market expectations of an October hike have receded. The December 8-9 meeting is the last of the year. [ 3 ]
Why it matters
The minutes indicate that US policymakers see inflation risks tilting higher, partly because of energy prices linked to the Middle East situation, which keeps a further rate rise this year on the table. Mainichi Shimbun reported that market expectations of an October hike have receded, pointing to the December 8-9 meeting as the remaining opportunity this year.
Key facts
- The Fed released the minutes of the FOMC meeting held September 15-16 on October 7. [ 1 , 3 ]
- Most FOMC participants said an additional rate hike by the end of the year would be appropriate. [ 1 , 2 , 3 ]
- In September the Fed raised its policy rate by 0.25 point to 3.75-4.00%, its first hike in three years and two months, since July 2023. [ 1 , 3 ]
- The September decision was unanimous. [ 1 , 3 ]
- Participants pointed to fuel price increases linked to the Middle East situation and a surge in AI-related investment as factors pushing prices up. [ 3 ]
- The Fed's 2% inflation target has not been met for more than five years, Jiji Press reported. [ 1 ]
- The next FOMC meeting is on October 27-28, and the last meeting of the year is on December 8-9. [ 3 ]
Confirmed by several sources
- Most FOMC participants backed an additional rate hike by year-end. [ 1 , 3 ]
- The Fed raised rates by 0.25 point in September, its first hike in three years and two months, in a unanimous decision. [ 1 , 3 ]
- Participants expressed concern about upside risks to inflation, with energy and fuel prices cited as a factor. [ 1 , 3 ]
Still unclear
- Whether the next hike would come in October or December. Mainichi Shimbun reported no views in the minutes suggesting a consecutive hike in October and said market expectations of an October move have receded; the minutes say decisions will depend on incoming data.
- How strongly the minutes framed the year-end hike. Jiji Press reported a majority saw a year-end hike as appropriate, while Mainichi Shimbun quoted participants as saying it was 'likely to be appropriate'.
- How many further hikes participants expect. The documents do not give a number of additional hikes from the minutes.