Fed Minutes: Most Officials Saw Another Rate Hike Likely by Year-End

Most Federal Reserve officials thought another interest rate increase would likely be needed by the end of 2026, according to minutes of the Sept. 15–16 policy meeting released on Wednesday, Oct. 7. The minutes say "most participants assessed that another increase in the target range for the federal funds rate would likely be appropriate by year end."

Earlier in the day, Treasury sold $39 billion of reopened 10-year notes at a high yield of 5.300%, up from 4.834% when the same note was reopened on Sept. 9, according to TreasuryDirect.

What did the Fed minutes say about another rate hike?

Officials signaled more tightening was likely, but not on a fixed schedule. Participants "emphasized, however, that they approached each meeting with an open mind," the minutes say, and that decisions would depend on incoming information. The next meeting is Oct. 27–28.

At the September meeting, chaired by Kevin Warsh, "all participants supported raising the target range for the federal funds rate 1/4 percentage point to 3-3/4 to 4 percent." The statement passed 12–0.

The minutes give several reasons for the hike:

Participants "had not seen sufficient progress on lowering inflation in recent months."
"Many participants emphasized that a higher path for the target range would be prudent on risk-management grounds."
"A number of participants viewed a higher path for the target range as necessary based on their modal outlooks."
"Several participants stated that they viewed the current policy rate as not restrictive or only mildly restrictive."
"A couple of participants remarked on having increased their estimate of the neutral federal funds rate."

How did Fed staff see inflation?

Fed staff estimated that total PCE inflation "edged up to 3.8 percent in August," while core PCE inflation was estimated at 3.4 percent, the minutes say. Staff projected inflation would reach 2% in 2029 and saw risks to the inflation forecast "as skewed to the upside."

Participants cited energy prices pushed up by geopolitical developments and "surging AI-related investments" as sources of price pressure. Some "expressed concerns that, after more than five years of inflation above 2 percent, elevated inflation rates could begin to affect inflation expectations."

What did officials say about bond yields and credit?

The minutes say "many participants commented that, despite the recent rise in longer-term Treasury yields, financial conditions appeared to be supportive of economic growth." A few officials said housing was an exception, "with mortgage rates remaining at elevated levels."

The New York Fed's markets manager reported that nominal yields rose "around 35 basis points across the 2- to 10-year segment of the yield curve" between the July and September meetings.

10-year note auction results

10-year reopening	Oct. 7	Sept. 9
Amount offered	$39 billion	$39 billion
High yield	5.300%	4.834%
Median yield	5.255%	4.769%
Bid-to-cover ratio	2.77	2.71
Indirect bidders' share	80.3%	79.2%
Direct bidders' share	17.1%	16.5%
Primary dealers' share	2.5%	4.3%

Source: TreasuryDirect auction results. Shares are of accepted competitive tenders.

The note carries a 4-5/8% coupon and matures Aug. 15, 2036. It sold at a price of 94.864261 per $100. Primary dealers were awarded $984 million, or 2.5% of accepted competitive bids, down from 4.3% in September, while indirect bidders took 80.3%. Bids at the high yield received 57.60% of the amounts sought, Treasury said. Our preview of the auction and minutes has more background.

How Treasury yields closed on Oct. 7

Maturity	Oct. 6	Oct. 7
2-year	4.79%	4.77%
10-year	5.27%	5.28%
30-year	5.64%	5.67%
10-year minus 2-year	0.48	0.51

Source: U.S. Department of the Treasury, daily par yield curve rates.

The 10-year yield remains below Monday's 5.31% close, covered in our 10-year yield report. Treasury reopens $22 billion of 30-year bonds on Thursday, Oct. 8, according to TreasuryDirect. Meeting dates are in our Fed calendar for 2026–27, and more coverage is in the Rates and Policy section.