The minutes of the US Federal Reserve's September monetary policy meeting, published on Wednesday, October 7, showed that most Fed officials considered another interest rate increase before the end of this year to be appropriate, as inflation has remained above the Fed's 2% target for a prolonged period. At the two-day meeting that ended on September 16, the Federal Open Market Committee, or FOMC, voted unanimously 12-0 to raise short-term interest rates by 0.25% to a range of 3.75% to 4.00%, the first rate hike since July 2023. The Dot Plot report indicated that 16 of the 18 officials expected one more rate increase this year. The minutes also showed that Fed officials differed over the rationale for this rate hike, with some seeing it as a way to limit the impact of the energy price crisis and others viewing it as a move to curb demand-driven inflation, while stressing that future decisions will depend on incoming data and their effect on the economic outlook and the balance of risks. Fed Chair Kevin Warsh said at a press conference that inflation is too high and has persisted for too long, emphasizing the importance of restoring price stability to drive US economic growth.
Fed minutes show most officials back another rate hike before year-end, implying a higher policy rate.
Expectations of another Fed rate hike push Treasury yields higher, so the 10Y yield rises.
