Fed Officials See One More Rate Hike As Appropriate

The US Federal Reserve in its September meeting agreed to remain restrictive for some time. On a differed note the officials also saw one more rate hike as appropriate going ahead to meet their target of 2% inflation.

The recent FOMC meet minutes noted that all members of the rate-setting Federal Open Market Committee agreed they could 'proceed carefully' on future decisions, which would be based on incoming data. 'Policy should remain restrictive for some time until the Committee is confident that inflation is moving down sustainably toward its objective,' the report added.

During the meeting last month, the Fed officials held their benchmark lending rate at a range of 5.25-5.5%, and signaled rates would stay higher for longer than previously expected following one more rate increase this year. But the FOMC decided to keep the rates unchanged in that meet.

The US Federal Reserve has hiked the key interest rates 11 times since March of 2022 taking it to 5.25-5.50%, which is the highest in 22 years.

Since the September FOMC meet, US treasury yield have seen a sharp surge with 10-year yields climbing to highest levels since 2008 and 2-year yields rising above 5%.

A few central bank officials, including Vice Chair and Governor have indicated that the tightening in financial conditions may negate the need for further hikes.

The minutes noted that most FOMC officials see upside risks to prices, along with the potential for slower growth and higher unemployment. Inflation data points have been indicating progress toward the central bank's 2% target along with a few hiccups.

The street is awaiting the release of US September inflation reading today. Ahead of the inflation report, frontline indices of the US market ended with gains of up to 0.7%, which market the fourth straight session of gains. US Treasury yields and Dollar Index continued to retreat.