According to the minutes of the September 15-16 Federal Open Market Committee meeting released by the Federal Reserve on the 7th, officials were divided over the reasons for raising interest rates. At its September meeting, the Fed decided to raise the federal funds rate target by 0.25 percentage points to 3.75-4.00%, and the decision was unanimous. The minutes noted that many participants stressed that, from a risk-management perspective, it would be prudent to keep the target range for the policy rate at a higher level. Meanwhile, other participants judged it important to prevent recent price shocks, such as in energy, from having broader effects on prices, and two participants supported the rate hike because they believed estimates of the neutral rate were higher than before. Several participants also expressed the view that the current policy rate is not restrictive, or that even if it is restrictive, the degree is small, and most participants judged that it would likely be appropriate to raise the target range for the federal funds rate again by the end of the year.
Fed minutes show officials divided but most judged another rate hike likely by year-end, keeping the policy rate higher.
Minutes signaling a likely further rate hike by year-end imply upward pressure on Treasury yields.
