Fed officials see more rate hikes needed as inflation stays above 2% target

October 1, 2026 at 08:19 PM2 min

This digest was compiled by AI from multiple sources — links to the originals are below.

Three Federal Reserve officials said on Thursday that inflation remains too high and more interest rate increases may be needed. Boston Fed President Susan Collins and Kansas City Fed President Jeff Schmid both pointed to risks on the inflation side, while Minneapolis Fed President Neel Kashkari said he expects to raise rates again depending on economic performance.

Key Facts

Boston Fed President Susan Collins said inflation has been too high for too long and that monetary policy can focus on restoring 2% inflation.
Kansas City Fed President Jeff Schmid said the Fed has not fulfilled its promise on inflation and more rate hikes may be needed.
Minneapolis Fed President Neel Kashkari said the August PCE report does not change his expectation to raise rates again.
Core PCE inflation rose 3.0% year over year in August, below the 3.3% expected and down from 3.3% in July.
Long-term Treasury yields have risen to a 24-year high on concerns about a strong economy, inflation, and large fiscal deficits.

Fed Officials' Inflation Warnings

Boston Fed President Susan Collins said inflation has been too high for too long and that some parts of the data are not as promising as others. Collins added that with the labor market on relatively solid footing, monetary policy can focus on restoring sustainable, durable 2% inflation in a timely way. Kansas City Fed President Jeff Schmid said the Fed has not fulfilled its promise on the inflation side and agreed that more rate hikes may be needed. Minneapolis Fed President Neel Kashkari said the August PCE report does not change the story for him and that he expects to raise rates again depending on economic performance.

Inflation Data and Market Reaction

The Personal Consumption Expenditures index excluding food and energy rose 3.0% in August from a year earlier, below the 3.3% expected and down from 3.3% in July. Month over month, core PCE inched down to 0.2% from July and beat expectations of a 0.3% rise, though part of the improvement was due to a change in government data calculation. Long-term Treasury yields have soared to a new 24-year high on worries about a strong economy, inflation, and large fiscal deficits. Richmond Fed President Tom Barkin pointed to demand for bonds issued by AI companies taking away demand for Treasury bonds, as well as a larger supply of Treasurys to finance the US record fiscal deficit.