Powell says September inflation data drove last week's rate hike
The increase was the Federal Reserve's first since 2023, and officials are still debating how much further rates need to rise
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Chart: Fed target rate, top of the range
UpdateThursday, September 24, 2026 at 10:15 AM ET
Powell frames September's hike as improving the Fed's position against inflation, not as a move driven directly by September's inflation data as first reported.
Powell says the Fed may need to raise interest rates again to bring inflation down to its 2% goal, and describes September's hike as having put policy in a better position to fight inflation rather than as a response to inflation data alone. St. Louis Fed President Alberto Musalem has joined Barr in framing further tightening as likely but dependent on incoming data. Markets' pricing of two more hikes formed after Barr's earlier remarks.
Fed Chair Jerome Powell says the central bank's rate hike last week was driven by September's inflation reports. The increase was the Fed's first since 2023.
Other officials have been laying out their own reasoning in recent days. Fed Governor Michael Barr says more rate hikes are likely needed to bring inflation down to the Fed's 2% goal, arguing that inflation risks now outweigh concerns about the labor market. Atlanta Fed President Raphael Bostic has drawn a distinction between near-term and long-term inflation expectations, calling the short-run figures encouraging but not the longer-run ones. New York Fed President John Williams says the era of explicit forward guidance from the Fed is over.
Markets are pricing in two more rate hikes.
Powell's decision to point directly to the September data reinforces that the Fed is moving meeting by meeting rather than following a preset path, in keeping with Williams' comments that forward guidance has ended. With several officials signaling that further tightening may be needed and inflation still sticky, Powell's remarks leave the door open to more hikes and keep the rate path uncertain. That is a backdrop investors are treating as neutral to slightly negative for equities, given the emphasis on inflation that has not gone away.