Fed Minutes Show Unanimous Backing for September Rate Hike, More Seen by Year-End

The minutes show almost all participants saw inflation risks tilted to the upside and job market risks as broadly balanced

Minutes from the Federal Reserve's September 15-16 meeting show every participant supported the 25 basis point rate hike, and most judged that another increase would likely be needed before year-end. Participants generally stressed that inflation remained elevated.

Almost all participants saw inflation risks tilted to the upside, while job market risks were seen as broadly balanced. Some participants said inflation risks have grown more skewed in recent months. Some also flagged that the buildout of artificial intelligence infrastructure could push demand ahead of supply.

The minutes describe a hawkish committee stance that predates comments from Federal Reserve officials John Williams and Philip Jefferson, whose remarks on October 1 signalled patience and pulled the 10-year Treasury yield back from a high of 5.24%, while cutting the odds of an October hike to roughly a coin flip. Unanimous support for the September move, a lean toward another hike by year-end, and explicit worry that AI-driven demand could outrun supply sit closer to the tightening case made by officials Austan Goolsbee and Lorie Logan than to the no-urgency tone that briefly eased long-dated yields.

Because the minutes predate a softer reading on the Fed's preferred inflation gauge and the dovish commentary that followed, they support the view that the recent pullback in yields reflected uncertainty over timing rather than any easing in the committee's underlying concern about inflation. That leaves upcoming economic data as the likely trigger for whether long-dated yields resume climbing.