Fed Officials Signal Support for Another Rate Hike Before Year's End

The Federal Reserve's rate hike chances have increased significantly after several officials expressed support for another increase before the end of the year. According to the CME Group's FedWatch tool, the probability now stands at 68%, up from last week's 55.4%. The most recent official to signal support was New York's John Williams, who said investor sentiment suggests 'another rate hike may be appropriate by the end of the year.'

Federal Reserve Governor Michael Barr also emphasized the need for further policy adjustments to combat inflation. He noted that while economic growth and the labor market are strong, inflation remains above the 2% target. Boston Federal Reserve President Susan Collins expressed similar views, stating an increased likelihood of future scenarios with inflation remaining above 2%. She supported the recent rate hike and anticipated potential needs for more moves.

The Fed's decision to deliver a widely expected rate hike last week was unanimous, with Chair Kevin Warsh striking a hawkish tone in his press conference. He stated that the FOMC's 'predominant focus is on the price stability side of our mandate.' The plain fact, according to him, is that inflation is too high and has been for too long.