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Fed & Monetary Policy

Fed hawks multiply as three FOMC voters back another rate increase

Officials from New York, Philadelphia, Cleveland and the Board of Governors all argued this week that inflation still requires higher rates.

Assembled by Claude from 9 sources at 7 outlets · Friday, September 25, 2026, Morning edition, 10:26 AM EDT · no human byline

Disclosure. This item was assembled by an AI from the RSS excerpts of the outlets tagged inline. No human wrote or checked it before publication. Feed selection and categories are editorial choices by Teresa Lo. Nothing here is investment advice.

What happened

Two Federal Reserve policymakers said on Thursday that the US central bank will likely need to raise interest rates again to curb what they described as unacceptably high inflation reuters.com. Philadelphia Fed President Anna Paulson said additional increases may be needed to bring inflation back to the central bank's 2% target kitco.com. Paulson framed the step as modest further tightening actionforex.com. New York Fed President John Williams said separately that it was reasonable to think the central bank would raise rates again this year reuters.com.

Williams also said that he and his colleagues still have a lot of work to do in dealing with lingering inflation news.bloomberglaw.com. Cleveland Fed President Beth Hammack said on Thursday that inflation pressures remain tilted to the upside streetinsider.com. Hammack added that growth remains solid and the labour market is still close to maximum employment, which she said gives the Fed more room to act actionforex.com.

Why it matters to investors

The week's remarks mark a broadening rather than a single hawkish outlier: three FOMC voters have now backed additional rate increases finance.yahoo.com. Fed Governor Michael Barr called for further increases on Wednesday, warning that inflation was likely heading higher finance.yahoo.com. Barr described further policy adjustment as likely in his base case and noted that the economy has absorbed a series of shocks over the past year and a half, including tariffs finance.yahoo.com.

That is a different message from a central bank pausing to assess. Paulson's language pointed to more tightening to quash inflation rather than to a hold kitco.com, and Hammack's assessment of the labour market removes the usual argument for caution actionforex.com. For portfolios, the relevant shift is that officials are describing the inflation problem as unfinished news.bloomberglaw.comstreetinsider.com rather than as a supply shock to be looked through.

What to watch

Market pricing has moved with the rhetoric. Odds of an October increase jumped to nearly 70% after Barr said more tightening was likely finance.yahoo.com. Traders were pricing a nearly 70% chance of a hike next month on the CME FedWatch tool, alongside Williams's comments commbank.com.au.

The open questions are the timing and the sequencing. Williams did not commit to a date, saying only that another increase this year was reasonable reuters.com. Barr's framing rested on inflation heading higher rather than on any single data release finance.yahoo.com. Hammack's case turns on growth and employment holding up actionforex.com, so the next round of labour and price data will determine whether the hawkish bloc widens further or stalls. Paulson's qualifier, that the tightening would be modest actionforex.com, also leaves open how far the committee intends to go beyond one move.

Sources

  1. news.bloomberglaw.com: Fed's Paulson Says Further Modest Rate Hikes May Be Needed (2) - Bloomberg Law (2026-09-25)
  2. reuters.com: Fed officials see rates likely rising to curb high inflation - Reuters (2026-09-25)
  3. reuters.com: Fed's Williams says it is reasonable to see another US rate hike this year | Reuters (2026-09-25)
  4. finance.yahoo.com: Three FOMC Voters Back Additional Rate Hikes to Cool Inflation - Yahoo Finance (2026-09-25)
  5. finance.yahoo.com: October Fed Rate Hike Odds Jump To Nearly 70% As Fed's Barr Says More Tightening Is 'Likely' (2026-09-24)
  6. streetinsider.com: Fed's Hammack warns inflation pressures remain tilted to upside - StreetInsider (2026-09-24)
  7. kitco.com: Fed's Paulson says more rate hikes may be needed to quash inflation | Kitco News (2026-09-25)
  8. actionforex.com: Fed Hawkishness Broadens as Paulson Backs “Modest Further Tightening” - ActionForex (2026-09-25)
  9. commbank.com.au: Wall Street dips as Middle East uncertainty lifts oil and yields - CommBank (2026-09-25)