Fed Policymakers Lean Against October Rate Hike

Fed policymakers have tempered expectations for an interest rate hike in October, citing the need for more data before making a decision. In recent comments, Federal Reserve Bank of New York president John Williams said 'there is no need for urgency' on changing monetary policy, while Federal Reserve vice-chair Philip Jefferson emphasized that any future adjustments should be determined by carefully examining trends in the data and the evolving outlook.

The shift in sentiment comes as investors have largely abandoned bets on an interest rate increase at the Fed's next policy meeting. Market pricing now suggests only a 25% chance of a rate hike this month, down from about 70% earlier in the week.

Fed policymakers project one more rate hike this year, and some officials believe additional increases may be necessary to get inflation back on track to the Fed's 2% goal. However, others caution that higher term premiums could slow the economy, reducing the need for tighter monetary policy.