- Fed officials expect another quarter-point rate increase by year-end, with 16 of 18 FOMC participants projecting one more hike, according to minutes from the Sept. 16 meeting.
- The minutes give no fixed timing, saying future decisions depend on incoming data; recent inflation readings and comments from leading officials make an October hike unlikely.
- Treasury yields are at their highest since 2002, which officials attributed to Fed rate expectations, the AI buildout, solid economic growth, and some uncertainty around the Treasury buyback program.
- Inflation remains above target: core PCE was 3% and headline 3.4% for August, while a New York Fed survey showed consumer inflation fears at their highest since May 2023.
Quotes
“most participants assessed that another increase in the target range for the federal funds rate would likely be appropriate by year end”
“Many participants emphasized that a higher path for the target range would be prudent on risk-management grounds, providing insurance against inflation remaining persistently above target due to stronger-than-expected demand or further adverse supply shocks”
“a dose of accommodation”