Fed officials say another rate hike will be needed later this year
Federal Reserve officials released the minutes of their Sept. 15‑16 meeting on Oct. 7, 2026, showing a unanimous view that inflation remains elevated and far from the central bank’s 2% target, and that another rate increase will be required later in the year.
The committee’s statement comes after the Fed lifted its key interest rate by a quarter point to about 3.9% at the September meeting – the first increase in three years. Officials said the move was intended to bring borrowing costs higher to slow spending and bring inflation down.
Inflation data cited in the minutes indicate overall prices were up 3.4% year‑over‑year, with core prices – which exclude food and energy – rising 3% over the same period. On a month‑to‑month basis, prices increased 0.3% from July to August, while core prices rose 0.2%.
Despite the higher rates, many participants noted that financial conditions, including equity prices and narrow corporate‑bond spreads, still appeared supportive of economic growth. Several officials argued that the current policy stance was "too low to restrain the economy" or only a "mild restraint," suggesting they would back additional hikes to cool demand.
Policymakers also pointed to external pressures that keep inflation sticky. Higher oil and gas prices linked to the Iran conflict, lingering tariff effects, and a surge in AI‑related investment have lifted input costs for businesses. The minutes mentioned that inflation is stuck between 2.5% and 3%, above the Fed’s target.
Chair Kevin Warsh told reporters after the September decision that inflation has been "too high and has been for too long," and that the Federal Open Market Committee concluded the standard had not been met. Vice Chair Philip Jefferson added that policymakers will need to come to "our own judgement," which may take additional time.
President Donald Trump criticized the rate hike as politically motivated, but he continued to express support for Chair Warsh.
Market participants are now pricing in a roughly 20% chance of a quarter‑point hike at the Oct. 28‑29 meeting, down from about 70% in the days following the September decision. Futures pricing suggests most investors expect rates to stay unchanged in October and potentially rise in December. The upcoming Consumer Price Index report on Oct. 14 could influence that outlook.
The Federal Reserve indicated it will monitor the economy and the impact of the September increase before deciding on any further action, leaving the next policy move to be determined after the October meeting and the next set of inflation data.