Fed Policymakers Cool Rate Hike Expectations Ahead of October Meeting
US Federal Reserve policymakers John Williams and Philip Jefferson have expressed caution regarding another interest rate hike in October. Speaking on September 29, Williams stated that there is no need for urgency to change the current setting of monetary policy.
Williams also mentioned that 'one further upward adjustment' in the policy rate may be appropriate late in 2026. This view was echoed by Jefferson on October 1, who emphasized the importance of carefully examining trends in data and the evolving outlook before making any decisions.
The Fed's September rate hike has already led to a rise in bond market yields, with the yield on the 10-year Treasury note touching a 24-year high on October 1. Despite this, traders are now pricing only about a 25% chance of a rate hike in October, down from around 70% earlier in the week.
Minneapolis Fed president Neel Kashkari also shared his view that one more rate hike is still expected in 2026 and another one in 2027. He mentioned that if the economy proves to be resilient and inflation sticks around, policy might need to go higher than anticipated.