Fed officials deemed another rate hike “appropriate” but didn’t commit

Oh, please. We can’t be the only ones looking for High Drama™ from every Federal Open Market Committee meeting! Live a little, people! Or, at the very least, forgive us for wanting some hot gossip!

But even if the gossip-loving among us didn’t exactly get any spicy tidbits from the Federal Reserve’s freshly released minutes from its September 15–16 meeting, we did get some valuable information: Fed officials anticipate raising interest rates again before the end of 2026, the record showed.

In case you somehow forgot: At the last FOMC meeting in September, the Fed raised interest rates for the first time since 2023, which also marked the first rate hike of Kevin Warsh’s brief tenure as chair. In the post-meeting press conference, Warsh said, “the plain fact is that inflation is too high and has been for too long.”

The rate hike was largely expected, but it was unclear at that time how the FOMC would proceed for the rest of the year: September’s dot plot of FOMC officials’ borrowing cost expectations showed 16 out of 18 anticipated another interest rate hike in 2026.

Discussion points. The minutes released on October 7 added some clarity: “With regard to the outlook for monetary policy beyond the current meeting, most participants assessed that another increase in the target range for the federal funds rate would likely be appropriate by year end.” The FOMC “judged that this would support a timelier return of inflation to the committee’s 2 percent goal.”

“Participants emphasized, however, that they approached each meeting with an open mind and decisions at future meetings would depend on incoming information and its implications for the outlook and the balance of risks,” the document continued.

Fed officials discussed some of the key moving parts driving their outlook, like inflation and the labor market; “participants generally assessed inflation risk as skewed to the upside; some participants remarked that those risks had become more skewed to the upside in recent months.”

With respect to the labor market, FOMC members viewed conditions as “stable and generally viewed the labor market as close to maximum employment.” In addition, “almost all participants assessed that…risks to the labor market had diminished and were now broadly balanced.”

“While the minutes present a broadly unified hawkish front, the emphasis on optionality and a timelier return of inflation to target provides a clearer signal of the committee’s reaction function,” EY-Parthenon Chief Economist Gregory Daco told CFO Brew via email.

“There are clearly policymakers who favor an unconditional higher policy path, but the center of the committee remains focused on incoming data rather than pre-committing to further tightening,” Daco added. “We continue to view December as the more likely window for further tightening should incoming data warrant additional action.”