Fed Minutes: Most Officials See Another Rate Hike by Year End

Most Federal Reserve officials expect to raise interest rates again before the end of the year. That is the main message from the minutes of the Fed's 15-16 September meeting, published on Wednesday 7 October. At that meeting the Federal Open Market Committee lifted the federal funds rate by a quarter point to a range of 3.75% to 4.00%, and the vote was unanimous, 12-0.

According to the minutes, "most participants assessed that another increase in the target range for the federal funds rate would likely be appropriate by year end." No participant is recorded as arguing against further tightening. The dollar barely moved on the release, because traders had already priced in a hawkish tone, but it stayed close to the 18-month high it reached on Monday.

What the minutes say about inflation

Inflation is the reason the Fed is still tightening. The minutes put headline PCE inflation, the Fed's preferred measure, at 3.8% in August, with core PCE, which strips out food and energy, steady at 3.4%. Both are far above the 2% target, and several participants said they "had not seen sufficient progress on lowering inflation in recent months".

Officials pointed to three sources of pressure. Energy prices rose after an escalation of geopolitical tensions; past tariff increases are still feeding through, with further tariffs named as an upside risk; and the minutes say "surging AI-related investments were contributing to inflation pressures". Risks to the inflation forecast were described as "skewed to the upside".

Fed staff expect inflation to step down over the next two years and to reach 2% only in 2029. That is a long time for a central bank to sit above its goal, and it explains why most officials want to keep the option of another hike open.

Jobs: the data has changed since the meeting

The labour market looked solid in September. Officials noted that unemployment had moved down to 4.1% in July and August, judged conditions "stable", and said risks to employment were now "broadly balanced".

Numbers released since then are softer. On 2 October the Bureau of Labor Statistics reported only 29,000 new jobs in September and a rise in unemployment to 4.2%, with July and August revised down by a combined 60,000. Those figures came out after the meeting, so the minutes do not reflect them, and they are one reason some traders doubt the Fed will move as soon as October, even though the year-end signal is clear.

How markets reacted

The reaction was muted because the hawkish message was largely expected. The US Dollar Index (DXY) closed Wednesday near 102.25, up about 0.3% on the day, and traded around the same level early on Thursday. Monday's high of 102.54 was the strongest level since April 2025.

UTC daily closes built from hourly market data. Gold futures traded about $25 above spot gold on Thursday morning.

Gold took the biggest hit. Futures fell about $61 on Wednesday, and spot gold dropped to roughly $4,065 an ounce, its lowest level since early August, before steadying near $4,117 on Thursday morning. A metal that pays no interest struggles when yields rise and the Fed signals more tightening.

Treasury yields stayed close to their highest levels in about two decades, with the 10-year note near 5.3%. In the minutes, officials noted that nominal yields had risen around 35 basis points across the 2- to 10-year part of the curve between the July and September meetings.

What it means for the major pairs

EUR/USD is the pair most exposed. The euro is already under pressure from French budget worries, and Wednesday's drop took it back to 1.1168, two pips above Monday's low of 1.1166. GBP/USD slipped back to the floor of its range near 1.3200, while USD/JPY held around 158 as fears of Japanese intervention limited the upside.

If the dollar keeps its yield advantage into the October meeting, rallies in EUR/USD and GBP/USD are likely to meet sellers. A soft US inflation report would be the most likely trigger for a relief bounce. Our daily EUR/USD analysis and gold analysis carry today's levels and trade plans.

What it means for the October meeting

The next decision is due on 28 October. Futures pricing based on CME FedWatch, as reported by FXStreet, put the chance of an October hike at about 20% after the minutes, with roughly 80% odds of at least one more increase by the end of the year. Put simply, markets think the Fed will hike again, but more likely in December than this month.

Two data points could change that. September consumer price inflation is due before the meeting, and another weak jobs report would make officials more cautious. A hot CPI reading would revive talk of an October move.

How to trade around Fed news

Fed events move the dollar, gold and every major pair at once. A few habits keep the damage small when a headline hits.

• Check the economic calendar each morning for Fed speeches and US data; today Governor Christopher Waller and St. Louis Fed President Alberto Musalem are scheduled.
• Cut position size before high-impact releases, since spreads widen and stops can slip.
• Watch the 10-year Treasury yield next to EUR/USD and gold; in this cycle they have moved together.
• Use the position size calculator so a single trade risks no more than 1% to 2% of your account.

Frequently asked

Sources: Federal Reserve: FOMC minutes, 15-16 September 2026 · US Bureau of Labor Statistics: Employment Situation · FXStreet: Fed minutes report, 7 Oct