Fed minutes show willingness to hike rates if inflation remains above 2%

## Market snapshot Prediction markets have become less supportive of rate cuts. Odds imply just a 1.2% "YES" chance of a rate cut by June 2026. Pricing for "Fed rate hike in 2026" has firmed, with the "YES" probability at 31.5%, up from 28% a week ago. ## Key takeaways – The latest Fed minutes point to fewer near-term rate-cut expectations, with officials prepared to consider hikes if inflation stays above the 2% goal. – Market pricing now assigns a higher chance of a 2026 rate hike, with "YES" odds rising to 31.5%. – The tone is more hawkish, matching softer expectations for policy easing by mid-2026. ## Article body Minutes from the Federal Reserve's latest meeting show most officials are open to raising interest rates if inflation continues to run persistently above the 2% target. The policy discussion comes as concerns over inflation pressures remain in focus and as the Fed reiterates its commitment to price stability. The Fed's policy rate is currently held in a 3.50%–3.75% range. The minutes indicate policy could turn more restrictive if inflation does not cool. The message follows similar recent comments from Fed officials and fits the central bank's broader approach to balancing growth with inflation expectations. ## Market interpretation The minutes reinforce a hawkish read and have pushed up implied odds of a rate hike in 2026. Reaction in prediction markets suggests a moderate-to-high impact: the "Fed rate hike in 2026" market now points to a 31.5% likelihood. At the same time, odds for a rate cut by June 2026 have slipped to 1.2% "YES". ## What to watch Investors will focus on upcoming inflation and labor-market data, which are likely to shape the Fed's next steps. Comments from Jerome Powell and other Fed officials may add clarity in coming speeches and reports. Shifts in sentiment from major financial institutions and updates to economic forecasts could also move expectations. The next FOMC meeting and subsequent public statements will be key drivers for rate outlooks.