Fed Ponders More Rate Hikes Amid Rising Inflation and Strong Economy

Rising inflation and a strong economy are pushing the Federal Reserve to consider additional interest-rate hikes. This comes as the US Composite PMI Output Index, a measure of business activity, jumped to its highest level since July 2021. Oil prices have also surged, with Brent crude futures rising by about 2% to $101.09 a barrel.

The Fed's policy rate was raised last week to the 3.75%-4.00% range, and 16 of 18 policymakers signaled the need for at least one more rate hike before the end of the year. Federal Reserve Governor Michael Barr stated that further policy adjustments are likely needed to ensure inflation comes down to target.

Short-term US interest-rate futures contracts are pricing a 70% chance of another Fed rate hike at the October 27-28 meeting, up from about 55% earlier in the day. This could have implications for national elections on November 3, as Democrats may benefit from back-to-back rate hikes attributed to the Trump administration's policies.