Fed Minutes Strike Hawkish Tone as Most Officials Expect Another Hike by Year-End

HIGHLIGHTS Most Fed participants said that another rate hike by year-end would be appropriate. These officials noted that the labor market is stable while inflation remains elevated. Crypto traders expect the Fed to hold rates steady at the FOMC meeting later this month. The September Fed minutes show that most FOMC members expect another rate hike by year-end, following last month’s hike. This comes as crypto traders bet on the FOMC holding rates steady this month, suggesting any potential second hike will come at the December FOMC meeting.
Fed Minutes Signal Another Rate Hike Still On The Table
According to the September FOMC minutes, most Fed participants agreed that another hike by year-end would likely be appropriate as they look to bring inflation down to their 2% target. “Participants emphasized, however, that they approached each meeting with an open mind and decisions at future meetings would depend on incoming information and its implications for the outlook and the balance of risks,” the minutes read.

This follows the September Fed rate hike, the first since 2023. Notably, all participants unanimously supported raising the federal funds rate. The minutes show that participants cited inflation concerns, noting that it remains elevated while the labor market appears solid and continues to strengthen.

These Fed officials alluded to Middle East uncertainty as one of the factors continuing to drive inflation higher. A couple of participants also mentioned AI-related demand as another factor that could drive prices higher and threaten their bid to bring inflation to their 2% target.
Rates To Remain Unchanged This Month
Crypto traders expect the FOMC to hold rates steady at its meeting later this month despite the Fed minutes signaling a potential second hike by year-end. Data from the top crypto prediction market platform Polymarket shows an 84% chance that the federal funds rate will remain unchanged at the October 28 meeting.

This suggests that any potential second Fed rate hike this year is more likely to occur at the December FOMC meeting. These crypto traders are currently betting that this is likely to be the case, with a 75% chance that the Fed will make another rate hike at its year-end meeting.

Meanwhile, Bitcoin remained largely unchanged following the release of the Fed minutes. The leading crypto is trading just above the psychological $83,000 level, down over 2% today, according to TradingView data.