Fed minutes show most officials favored another rate hike by year end

Most Federal Reserve officials viewed another interest rate increase as likely appropriate by year end, according to minutes of the September 15 and 16 meeting, as persistent inflation and resilient growth supported further tightening. All participants backed September’s quarter percentage point increase, which lifted the federal funds target range to 3.75% to 4%. Officials generally judged that the labor market was near full employment while inflation risks remained tilted to the upside. The minutes showed broad concern that inflation had made insufficient progress toward the Fed’s 2% target. Policymakers pointed to higher energy prices linked to geopolitical tensions and surging investment in AI infrastructure as sources of price pressure. Some officials warned that the AI buildout could push demand above supply over the medium term. Business contacts also reported rising costs, and some participants said companies appeared increasingly able to pass those increases to consumers. Fed staff estimated that annual headline PCE inflation reached 3.8% in August, while core inflation stood at 3.4%. Under a forthcoming change to the Bureau of Economic Analysis methodology, those estimate...