Fed officials line up behind another rate rise and markets move the next hike to October

New York Fed President John Williams, who holds the vice chair slot on the Federal Open Market Committee, said on Thursday that another rate rise by year-end is “reasonable”¹, describing a hike before the end of 2026 as a reasonable expectation². He also said that he and his colleagues “still have a lot of work to do”³.

The Philadelphia Fed’s Paulson signalled that more rate rises may be needed, in an account that describes inflation as staying sticky^2,3. Fed Governor Michael Barr said he thinks more work is needed even after last week’s 25 basis point increase, adding that in his base case further policy moves follow⁶. Barr’s base case is for multiple rate rises, which sits above the median Fed projection published last week showing just one more hike⁷.

Why it matters to investors

The question has moved from whether the Fed raises rates again to when, and how far. October is now the leading bet for the next increase, a shift that followed stronger readings from the manufacturing and services sectors as well as Barr’s comments⁴.

The two prediction-market readings in circulation differ. Kalshi put the odds of an October hike at 66%⁵. A separate account traces a move in October odds from 43% to 64% over one month, attributing it to a six-word pledge from the Fed’s Kevin Warsh that “The Committee will deliver price stability”⁸.

Either figure describes a policy path that is still tightening. For investors that means a higher floor under short-term funding costs and a higher hurdle rate for anything financed with leverage.

What to watch

The gap between the committee’s published projection and what individual officials are saying. The median projection showed one more hike while Barr describes multiple^6,7, and the Philadelphia Fed has left the door open to more than that². A revision at the next meeting would show which view has the committee behind it.

The data that moved the odds also bears watching, since the October repricing followed the manufacturing and services readings rather than any single speech⁴. Williams framed the outcome as still dependent on conditions rather than settled¹, and the Warsh pledge cited by traders is a stated commitment rather than a schedule⁸. A second point to follow is how far the repricing travels beyond the October meeting date: one account frames the open question as no longer whether rates rise but how high they can go⁸, which is a different exercise from pricing a single 25 basis point move⁶.