Federal Reserve officials expect to raise interest rates again before the end of 2026, according to minutes from the central bank’s September meeting, as inflation remains above the Fed’s 2% target.
Most policymakers said another increase in the federal funds rate would likely be appropriate by year-end. Among the 18 officials who submitted forecasts, 16 projected another rate hike.
However, the minutes did not specify whether the next move would come at the October 28 or December 9 meeting. Officials stressed that future decisions would depend on incoming economic data and the inflation outlook.
US inflation remains elevated, with August core PCE inflation at 3% and headline inflation at 3.4%, both above the Fed’s 2% target. At the same time, policymakers described the labor market as close to maximum employment and economic growth as stronger.
The outlook has also pushed US Treasury yields sharply higher, with yields reaching levels not seen since 2002. Officials linked the rise to expectations for higher Fed rates, strong economic growth and increased investment related to artificial intelligence.
For markets, the key focus now will be whether incoming inflation and employment data justify another Fed hike before year-end.
