Fed minutes signal another rate hike likely before year-end

Federal Reserve officials said they anticipate another increase in the federal funds rate before the end of 2024, according to minutes released from the Sept. 15-16 policy meeting. The document noted that persistently higher inflation and a stable labor market make a second hike likely, but emphasized that future decisions will depend on incoming data and the balance of risks.

The minutes quoted participants as saying, "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." They also added that each meeting would be approached with an open mind.

The Federal Open Market Committee voted unanimously to raise the benchmark rate by a quarter point at the September meeting. Sixteen of the 18 officials who submitted forecasts expect one more increase this year, followed by no hikes in 2027.

Recent data showed the core personal consumption expenditures price index at 3% and headline inflation at 3.4% for August, both above the Fed’s 2% target but lower than earlier expectations. Treasury yields have risen to levels not seen since 2002, a movement attributed to expectations of higher rates and broader economic factors.

While Chairman Kevin Warsh described the recent hike as removing "a dose of accommodation" from policy, other officials have cautioned against rushing further increases, noting that inflation trends have been somewhat more encouraging.