Fed Minutes Point to Another Rate Hike by Year-End

Most Federal Open Market Committee participants backed another U.S. rate increase before the end of 2026, keeping pressure on financial markets as inflation progress remains slower than expected.

The minutes from the Fed’s Sept. 15-16 meeting, released Wednesday, said most participants considered another increase in the federal funds target range appropriate by year-end. Officials stressed that future decisions would depend on incoming economic data and changing risks.

The Fed raised its target range by 25 basis points at the September meeting to 3.75% to 4%. The decision was unanimous. Participants cited elevated inflation, a solid pace of economic growth and a labor market that had recently strengthened.

Fed staff estimated August PCE inflation at 3.8% and core PCE inflation at 3.4%. Inflation was expected to decline toward the Fed’s 2% goal in 2029, with tariff effects, geopolitical developments and artificial intelligence investment adding to cost pressures in the meantime.

Markets have reduced expectations for an October increase and shifted more of their attention to the December meeting. The next FOMC meeting is set for Oct. 27-28.