October Fed Rate-Hike Odds Recede as Market Awaits FOMC Minutes
Summary
- The probability of an October rate hike has fallen to about 20% from 55%.
- The FOMC minutes will be watched for officials' support for further increases after the 25-basis-point benchmark rate hike in September.
- The dot plot showed that 14 of 18 Fed officials saw a need for 25 to 50 basis points of rate increases by the end of 2027.
Forecast Trend Report by Period
Expectations for a Federal Reserve interest-rate increase in October have retreated sharply, turning market attention to the minutes of the Federal Open Market Committee.
A key focus is whether Fed officials viewed current monetary policy as sufficiently restrictive.
Walter Bloomberg reported that the FOMC minutes due on October 7 will be closely watched for how strongly policymakers supported the need for further rate hikes after raising the benchmark rate by 25 basis points at the September meeting.
The probability of an October rate hike has fallen to about 20% from 55% as inflation and employment data came in softer than expected.
Still, the dot plot released in September showed that 14 of 18 Fed officials projected that an additional 25 to 50 basis points of rate increases would be needed by the end of 2027.
The minutes are likely to show whether Fed officials judged the current rate level restrictive enough and how quickly they saw any further increases being carried out.
JH Kim
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