Minutes from the Federal Reserve’s September meeting showed that policymakers broadly maintained a hawkish stance on rates, even though they differed on the reasoning behind further tightening. The document said most participants believed it may be appropriate to raise the target range for the federal funds rate again before the end of the year. At the same time, officials stressed that they would approach each meeting with an open mind and that future policy decisions would depend on incoming data.
Nick Timiraos, often referred to by market participants as the “Fed whisperer,” highlighted the same section of the minutes, pointing to the view that most participants still saw another increase in the federal funds target range as potentially appropriate before year-end. Despite that language, market pricing has shifted sharply. According to CME data cited in the report, investors were assigning less than a 20% probability to a 25-basis-point hike at the Fed’s Oct. 27-28 meeting as of publication, down from around 70% in the days following the September decision. The next key data point for that outlook may be the U.S. Consumer Price Index, due on Oct. 14.
Federal Reserve minutes from the September meeting showed a broadly hawkish stance among policymakers on rate decisions, though officials were not aligned on every reason for supporting further tightening.
The minutes said that “most participants judged that an additional increase in the target range for the federal funds rate likely would be appropriate before the end of the year.”
Even so, participants also stressed that they would keep an open mind at each meeting, and that policy decisions at upcoming meetings would depend on the latest information available at that time.
Nick Timiraos, the journalist often described by market watchers as the “Fed whisperer,” highlighted the same passage from the minutes. He said that, on the policy outlook beyond the current meeting, most participants believed another increase in the target range for the federal funds rate could be appropriate before year-end.
As of publication, CME data showed investors were pricing in less than a 20% chance of a 25-basis-point rate hike at the Fed’s Oct. 27-28 meeting. That was down sharply from about 70% in the days after the September decision was released.
The U.S. Consumer Price Index, scheduled for release on Oct. 14, may be an important data point shaping those expectations.
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