Fed's September Rate Hike Still In Play Despite Softer Data
By CU Today Staff —
WASHINGTON—The odds of a Federal Reserve rate hike in September have fallen following softer inflation and employment data, but minutes from the Fed’s July meeting show policymakers remain sufficiently concerned about inflation that another increase cannot be ruled out, Reuters reported.
According to Reuters, three policymakers voted to raise rates in July—the largest one-way dissenting bloc on the federal funds rate since 2016—and the minutes suggest support for tighter policy extends beyond those three. “Several participants” favored a quarter-point increase in July, while “many participants” said additional tightening would likely be needed to return inflation to the Fed’s 2% target.
Reuters noted that Fed Governor Christopher Waller has said higher rates could be needed in the “near term,” while Philadelphia Fed President Anna Paulson has said she remains “open” to an increase. Both are voting members of the Federal Open Market Committee this year. “September is still a live meeting for a hike,” Diane Swonk, chief economist at KPMG U.S., wrote on X Wednesday.
Markets nevertheless continue to view a September increase as unlikely, Reuters reported, with interest rate futures putting the probability at roughly one in three. The decision could hinge on upcoming inflation and employment reports, particularly as higher energy prices and continuing Middle East tensions threaten to renew inflationary pressure. Fed watchers will also be looking for signals from next week’s Jackson Hole symposium.
Originally reported by CU Today.