CIBC Research reviews the FOMC minutes from the September meeting.

"The September FOMC minutes confirm most members see another rate hike by year end. Members generally saw upside risks to inflation, some assessed that the longer energy prices remained elevated, the greater the risk of cost increases which could lead to broader price pressures. Some also warned that the AI buildout could cause aggregate demand to outpace supply, putting upward pressure on inflation. Several also noted the possibility of further tariff increases as an upside risk to inflation. There was also concerns that after more than five years of above target inflation, that could affect inflation expectations and price-setting decisions. On the labour market, they viewed it as stable and near maximum employment," CIBC notes.

"The staff economic outlook was revised up relative to the July meeting, with inflation projected to reach 2% only in 2029.  On the policy decision, many participants said a higher rate path was a prudent safeguard against persistent inflation driven by strong demand or supply shocks, while others saw it as necessary based on their economic outlook. Some also argued that higher rates would help keep inflation expectations anchored, prevent pressures from spreading, and reflected views that the current policy stance was only mildly restrictive. Beyond the current decision, most participants assessed that another hike would likely be appropriate by year end, but would approach the decision meeting by meeting, guided by incoming data." CIBC adds.