The minutes of the Federal Open Market Committee (FOMC) meeting of September 15-16, released on Wednesday, October 7 at 2:00 p.m. Washington time (8:00 p.m. in Italy), confirm that the Fed’s hawkish turn under Kevin Warsh was not a one-off. The Committee had unanimously raised the federal funds rate by a quarter point, in a 12-0 vote, to 3.75%-4.00%: the first hike since 2023. The minutes now show that, for «most participants», «a further increase in the target range for the federal funds rate would likely be appropriate by the end of the year».

The passage analysts watched most closely concerns the link between the AI investment boom and inflation. Some participants observed that «the buildout of artificial intelligence infrastructure could cause aggregate demand to exceed aggregate supply over the medium term», while others pointed to price pressures on core goods tied to that same wave of investment.

On top of this come higher oil and fuel prices due to «disruptions to oil shipments from the Middle East», and the still-incomplete pass-through of tariffs to final prices. Overall, «participants generally judged the risks to inflation as tilted to the upside»: PCE (personal consumption expenditures) inflation is estimated at 3.8% year over year in August, with core at 3.4%, both well above the 2% target. Several members described the September hike as a precautionary move, useful to «provide insurance against the risk that inflation remains persistently above target», after more than five years above the goal.

Focus on the Treasury market

On the bond side, the minutes acknowledge that the rise in long-term yields, fueled by stronger macro data, AI-related financing needs and geopolitical tensions, has not undermined market functioning: «Treasury markets have functioned in an orderly manner», though with a warning to «plan for possible market strains». Among the factors that contributed to higher yields, the minutes also cite uncertainty around the announcement and launch of the U.S. Treasury buyback program.

On the labor market, judged to be close to full employment, the minutes note that «employment growth has kept pace with the labor force, and the unemployment rate has changed little», holding at 4.1% between July and August.

Market reaction

The market reaction to the release was muted, because the hawkish tone was largely expected: the Dollar Index gained 0.4% to around 102.3, while the yield on the 10-year Treasury, after coming close in recent days to its highest level since 2002, is trading on October 8 at 5.33%. Federal funds futures continue to price a limited probability, between 20% and 25%, of a hike as soon as the next meeting on October 27-28, while the market sees a new move by the December meeting as more likely.

Editor’s note

This article was originally published in Italian on money.it by Flavia Provenzani on October 08, 2026 as «Dalle minute della Fed, la maggioranza del FOMC vede un altro rialzo entro fine anno. Il Treasury sale al 5,33%». It has been translated and adapted for an international audience by the Money.it International desk.