MediumIV Macro Policy & Sovereign Debt7 October 2026, Wednesday · 21:00 TRT (UTC+3)

Fed minutes point to one more rate rise before year-end

The Fed published the minutes of its 15–16 September meeting on 7 October. Most members think one more increase would be appropriate before the end of the year, but there is no concrete signal for October.

Location: WASHINGTON

Investing.com reported on 7 October that the FOMC, the Fed committee that sets rates, voted unanimously in September to raise its target range by 25 basis points to 3.75–4.00%. It was the first increase in more than three years. According to the minutes, most participants judged that a further rise by year-end would likely be appropriate. Yahoo Finance said members cited a labour market close to full employment and inflation that remains elevated.

The picture behind the minutes changed within three weeks. September payrolls, released on 2 October, rose by only 29,000 and unemployment climbed from 4.1% to 4.2%. The August PCE price index, the consumer-spending inflation gauge the Fed watches, was 3.4% year on year, with core PCE at 3%. CME FedWatch data cited by Yahoo Finance put the probability of a hike on 27–28 October at 17% and in December at about 70%.

Markets read the minutes as a signal of limited further tightening. Investing.com said the S&P 500 slipped 0.22% on 7 October and the ten-year yield rose 1.6 basis points to 5.284%. The same report put the probability of rates being held at the next meeting at 81%. The minutes contained no language pointing specifically to an October hike; the Fed left the decision to incoming data.

Talay assessment

Bottom line

The minutes show a Fed caught between the 3.4% inflation it saw in September and the 29,000 jobs it saw in October. A majority wants one more hike by year-end but leaves the timing to the data. The most likely path is a pause in October and a December decision driven by the inflation figures.

Likely effects

US front-end ratesNegativeWeeks
A 70% probability priced for December keeps the two-year yield elevated; expectations for the policy rate will not fall in the coming weeks.
DollarUncertainWeeks
A year-end hike signal preserves the rate differential supporting the dollar against the euro and sterling.
Türkiye's external financingNegative1–6 months
A Fed that keeps its tightening bias limits the CBRT's room to cut and caps any fall in the Treasury's dollar borrowing costs.

Possibilities, ranked

1
Hold in October, hike in December50%
The Fed holds on 28 October and raises by 25 basis points in December if October inflation comes in high.
Watch: September CPI and the December hike probability on FedWatch
2
No hike before year-end35%
Labour-market weakness persists for a second month and the Fed postpones the hike to 2027.
Watch: The October jobs report showing a second gain below 50,000
3
Surprise October hike15%
Energy-driven inflation accelerates and the Fed raises by 25 basis points on 28 October.
Watch: The October hike probability on FedWatch rising above 50%

Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.

Market reaction

Indicators affected

October hike probability▲ 17%
December hike probability▼ ~70%
10-year yield▼ +1.6 bp

Historical context