Most Federal Reserve officials said last month that they expect one more rate hike, according to minutes from their September policy meeting released Wednesday. Some officials said that how fast inflation cools in the coming months will determine how long rates remain elevated.
"A majority of participants judged that one more increase in the target federal funds rate at a future meeting would likely be appropriate, while some judged it likely that no further increases would be warranted," the minutes said.
The Fed held its key lending rate steady at a 22-year high in September as the central bank aims to assess more economic data to understand how the US economy is responding to previous rate hikes. Inflation's steady descent over the past year, and the job market's gradual cooldown, gave officials enough reassurance to pause, the minutes showed.
There is lingering uncertainty over how much the Fed's 11 rate hikes since March 2022 will weigh on economic activity. Financial markets are pricing in another pause at the Fed's upcoming October 31-November 1 monetary policy meeting, so that hike could come in December, depending on what economic figures reveal in the coming months.
The central bank's latest set of economic projections also showed that most Fed officials expect fewer rate cuts next year, confirming investors' fears that rates could remain higher for longer. Some officials said last month that how long they remain elevated hinges on inflation's trajectory.
"A few participants noted that the pace at which inflation was returning to the committee's 2% goal would influence their views of the sufficiently restrictive level of the policy rate and how long to keep policy restrictive," according to the minutes.
This story is developing and will be updated.
