After the Federal Open Market Committee held policy rates steady last month, a minority but growing view among central bankers is that a rate hike should be considered soon. Minneapolis Fed President Kashkari, Dallas Fed President Logan, and Cleveland Fed President Hammack, who dissented in July in favor of a quarter-point increase, have been joined by Kansas City Fed President Schmid in signaling support for further tightening. The majority, however, still sees a chance that inflation will cool on its own, and Fed Governor Cook warned that hiking too soon could hurt the labor market. The debate is expected to intensify in the coming weeks ahead of the Federal Reserve's annual economic symposium in Jackson Hole, Wyoming. Fed Chair Warsh will speak at the event, and investors will be watching for any clues on the future rate path, which he has so far avoided spelling out.
Growing minority favors rate hikes, which would raise the effective federal funds rate.
Potential rate hikes would push yields up, but the article's debate suggests uncertainty; however, the direction of the yield is up if hikes occur, so negative for bond prices.
