Fed Minutes Flag Another Rate Hike This Year — SkimNews
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- Fed minutes from the Sept. 15-16 meeting show officials unanimously agreed inflation was still elevated and hadn't made much progress toward the 2% target, with most expecting another rate increase after the central bank raised its key rate a quarter-point to about 3.9% — its first hike in three years.
- Trump called the rate-setting committee "very political," saying "They're raising rates to make Trump do as bad as they can possibly do," while still backing Chairman Kevin Warsh, whom he appointed earlier this year.
- Wall Street investors are pricing in no change at the Fed's Oct. 28-29 meeting and a rate hike at the December meeting, according to futures pricing.
- Fed officials believe inflation is stuck between 2.5% and 3% even excluding oil-and-gas and tariff effects, partly driven by surging prices for semiconductors and electrical components tied to data centre construction.
- The Fed's preferred gauge showed prices rose 3.4% year-over-year in August, with core up 3%, while longer-term mortgage rates have jumped on rising government debt, tech borrowing, and climbing oil and gas prices — factors the article says the Fed's hike has likely played only a "limited" role in driving.
- Vice Chair Philip Jefferson said last week that policymakers "will need to come to our own judgment, which may take more time," signaling no rush to follow up the September move.
Why it matters: With the key rate already at 3.9% and core inflation stuck at 3%, any further Fed hikes would push borrowing costs higher just seven weeks before midterm elections where affordability is the leading voter concern. The gap between officials' hawkish minutes and Wall Street pricing in a December move leaves mortgage rates — already climbing on tech-driven debt and oil — exposed to either outcome, complicating household planning.
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