Fed minutes show most officials expect another rate hike this year
In short
Most Federal Reserve officials expect another interest rate increase will likely be needed this year to combat inflation, according to minutes of the Sept. 15-16 meeting released Wednesday. At that meeting the Fed raised its key rate by a quarter point to a range of 3.75% to 4%, about 3.9%, its first increase in three years, and Bloomberg reported that all 19 officials backed the decision.
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Most Federal Reserve officials expect that another interest rate increase will likely be needed this year to combat inflation, according to minutes released Wednesday from the central bank's Sept. 15-16 meeting. "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, as quoted by The Hill. The officials unanimously agreed that inflation was still elevated and had not made much progress toward their 2% target in recent months, the Associated Press reported. [ 2 , 3 , 4 , 6 , 8 ]
At the September meeting the Fed raised its key rate by a quarter point to a range of 3.75% to 4%, or about 3.9%, its first increase in three years. Bloomberg reported that all 19 Fed officials backed the decision, with many supporting it to guard against the risk of intensifying inflation pressures. The Hill reported that 16 of 18 central bank officials projected at least one additional rate hike this year in the quarterly economic projections. [ 2 , 5 , 7 , 8 ]
Some officials have signalled caution since the meeting. The Hill reported that Vice Chair Philip Jefferson and New York Fed President John Williams said they may wait for more economic data before supporting another hike; Jefferson said policymakers "will need to come to our own judgement, which may take more time." Michael Barr, described by The Hill as a Fed vice chair, said at the Detroit Economic Club that "further policy adjustments are likely to be needed." The minutes said decisions depend on incoming information and that participants approached each meeting with an open mind. [ 3 , 8 ]
Wall Street investors forecast the Fed will keep rates unchanged at its next meeting and raise them in December, according to futures pricing cited by the AP. The AP dates that meeting Oct. 28-29, while The Hill gives Oct. 27-28 and Dec. 8-9 for the two remaining meetings of the year. [ 2 , 3 , 4 , 6 , 8 ]
The increase defied President Donald Trump's repeated calls for rate cuts and prompted him to criticize the rate-setting committee, though he still expressed support for Chairman Kevin Warsh, whom he appointed earlier this year, the AP reported. Longer-term borrowing rates have also risen in recent months for reasons including rising government debt, heavy borrowing by tech firms for data centers and climbing oil and gas prices; the AP said the Fed's hike likely played only a limited role. [ 2 , 3 , 4 , 6 ]
Why it matters
The minutes point to further tightening by year end, at a time when, according to the Associated Press, Americans are struggling with high costs for groceries, gas and housing and affordability is a leading issue in the midterm elections. Wall Street investors expect the Fed to hold rates at its October meeting and raise them in December, according to futures pricing cited by the AP.
Key facts
- Minutes of the Fed's Sept. 15-16 meeting were released on Wednesday. [ 2 , 3 , 4 , 6 , 8 ]
- Most participants assessed that another increase in the federal funds rate target range would likely be appropriate by year end, the minutes said. [ 2 , 3 , 4 , 6 , 8 ]
- The Fed raised its key rate by a quarter point to a range of 3.75% to 4%, about 3.9%, its first increase in three years. [ 2 , 3 , 4 , 6 , 8 ]
- Officials unanimously agreed that inflation was still elevated and had not made much progress toward the 2% target in recent months. [ 2 , 3 , 4 , 6 ]
- Bloomberg reported that all 19 Fed officials backed the September decision, many to guard against the risk of intensifying inflation pressures. [ 5 , 7 ]
- 16 of 18 central bank officials projected at least one additional rate hike this year in the quarterly economic projections, The Hill reported. [ 8 ]
- Wall Street investors forecast the Fed will hold rates at its next meeting and raise them in December, according to futures pricing. [ 2 , 3 , 4 , 6 ]
Confirmed by several sources
- Most Fed officials expect another rate increase will likely be needed this year, according to the minutes released Wednesday. [ 2 , 3 , 4 , 6 , 8 ]
- The Fed raised its key interest rate by a quarter point at the Sept. 15-16 meeting. [ 2 , 3 , 4 , 6 , 8 ]
- The September rate decision had unanimous support among officials. [ 5 , 7 , 8 ]
- Officials agreed inflation remained elevated relative to the 2% target. [ 2 , 3 , 4 , 6 , 8 ]
- Vice Chair Philip Jefferson has signalled that policymakers may take more time before another move. [ 3 , 8 ]
Still unclear
- The date of the Fed's next meeting. The Associated Press gives it as Oct. 28-29, while The Hill gives Oct. 27-28.
- How many officials took part in the decision and projections. Bloomberg says all 19 officials backed the hike, while The Hill cites projections from 18 central bank officials and describes a 12-member committee.
- Whether the Fed will raise rates again in October or December. Investors expect a December hike, but Jefferson and New York Fed President John Williams said they may wait for more data, according to The Hill.
What local media are saying
Timeline, local time
- Reuters previews the minutes as likely to detail the rate-hike decision and policy path. [ 1 ]
- The Associated Press reports the minutes show most officials expect another hike this year. [ 2 ]
- Bloomberg reports all 19 officials backed the September hike. [ 5 ]
- The Hill reports on the minutes and officials' differing views on timing. [ 8 ]