Key Highlights

● Some economists argue September's hike could be the Fed's last.

● Rising long-term yields are already tightening conditions.

● Two officials dissented in favor of an immediate hike.

● Market odds still lean toward a December increase.

The prevailing view on Wall Street after the Federal Reserve's October decision was that another rate hike is coming. Not everyone buys it, with some economists arguing the Fed's September hike, its first since 2023, could end up being its only one.

The Fed left its benchmark rate range unchanged, after raising it on September 16. Fed Chair Kevin Warsh said financial and credit conditions have tightened for some households and businesses, consistent with expectations, and that higher rates have affected the AI infrastructure buildout.

The Case for 'One and Done'

Other officials have sounded patient, with some saying there is no need for urgency. Rising long-term yields could also do some of the Fed's work, with the 10-year Treasury yield posting its biggest daily gain in a month, pushing past a key psychological threshold, and mortgage rates climbing over the past month.

A guidance increase late in a cycle carries weight, since investors often read a plateau as a sign that officials believe the current stance is sufficient.

The Case Against

Many forecasters see it differently, with two officials, Governor Lisa Cook and Cleveland Fed President Beth Hammack, dissenting in favor of an immediate hike. The statement said inflation remains elevated and upgraded growth, saying economic activity is expanding at a strong pace.

Markets leaned that way too, with odds of a December hike rising after the decision, though energy prices remain a wild card that could keep inflation sticky, strengthening the case for more hikes.