FOMC Minutes: All participants supported the 25bps hike in September and most assessed another increase would likely be appropriate by end of year

Participants generally emphasized inflation remained elevated while the job market appeared near full employment. Participants offered a range of views for why they supported a rate increase. Participants generally saw inflation risks skewed to the upside, with some seeing those risks becoming more skewed in recent months. Almost all participants saw inflation risks tilted to the upside, while job market risks were broadly balanced. Some participants saw AI buildout possibly causing aggregate demand to outpace supply over the medium term, putting upward pressure on inflation. The staff economic outlook was stronger than the one prepared for the July meeting. Many participants noted that despite the recent climb in long-term Treasury yields, financial conditions appeared supportive of economic growth. A few participants observed that the Treasury market had been functioning smoothly, but noted the importance of planning for market stress. Changes in real rates contributed to most of the net increase in longer-maturity Treasury yields. Nominal yields increased around 35 basis points across the 2- to 10-year segment of the yield curve. Part of the increase reflected the higher expected path of monetary policy and the strength of economic data. Market commentary pointed to geopolitical developments, uncertainty related to the US Treasury's announcement and implementation of the buyback program, and competition for capital from heavy private debt issuance to finance the development of AI infrastructure as also contributing to higher term premiums and Treasury yields. USD/JPY The joint U.S.–Japan intervention to support the yen in late July also directly contributed to dollar depreciation, given the yen's considerable weight in currency indexes. The manager noted that the Desk, acting purely as fiscal agent for the U.S. Treasury, intervened in the currency market using U.S. Treasury funds; the System Open Market Account portfolio was not involved.