Overview
- The Federal Reserve resumed tightening with a 25 basis point increase in September that raised the policy rate to 3.75%–4.00%, and minutes from that meeting said most participants saw another hike as likely this year.
- Governor Christopher Waller, speaking in Istanbul, reiterated that additional increases are probable if data warrant but said hikes need not occur at consecutive meetings and will remain data-dependent.
- Markets have reacted to the Fed’s shift by favoring a pause at the Oct. 27–28 meeting while pricing a higher probability of a quarter-point move in December, according to futures tracked by CME FedWatch.
- Officials identify specific inflation drivers that justify caution: higher energy costs tied to Middle East tensions, a large AI-driven investment cycle that lifts high-tech prices, and a still-resilient labor market.
- Policymakers stress a measured, meeting-by-meeting recalibration rather than an open-ended tightening campaign and note that higher market yields and upcoming inflation-measure revisions will affect how policy choices show up in the data.