Minutes from the Federal Reserve's September policy meeting reflect unanimous agreement among officials that interest rates needed to be higher to combat persistent inflation.

"Participants generally emphasized that inflation remained elevated while the labor market appeared to be near full employment, with some signs of strengthening, and that economic activity was expanding at a solid pace. Furthermore, almost all participants assessed that, while inflation risks were tilted to the upside, risks to the labor market had diminished and were now broadly balanced," minutes from the Sept. 16 meeting released Wednesday stated.

"Based on the outlook and the changing balance of risks, all participants viewed a higher target range for the federal funds rate as appropriate."

The Fed voted unanimously on Sept. 16 to raise rates, the first hike in three years. And at the time, most Federal Open Market Committee members saw a need for at least one more 25 basis point rate hike this year.

Markets were banking on a hike and expecting more to come.

But economic data released in the past few weeks has changed the picture considerably. "Core" PCE, the Fed's preferred inflation measure, rose a relatively cool 3% in August, beating expectations for a rise of 3.3% and marking a drop from 3.3% in July. Meanwhile, September jobs numbers fell far short of economists' expectations, with a gain of just 29,000 jobs, while the unemployment rate edged up to 4.2% from 4.1%.

Read more: How jobs, inflation, and the Fed are all related

That less rosy jobs picture, combined with a more positive read on inflation, had analysts — and some Fed officials — throwing cold water on the notion of another rate hike this month.

"This data won't shift the broader decision-making calculus for the Fed as inflation remains the supreme concern," Chris Hodge, chief economist for Natixis, previously told Yahoo Finance. "But with wages lower and the jobs picture a bit less rosy, it certainly decreases the urgency to hike in October (and perhaps December if inflation data cooperates)."

Federal Reserve Board Chairman Kevin Warsh speaks during a news conference at the Federal Reserve in Washington, Wednesday, Sept. 16, 2026. (AP Photo/Mark Schiefelbein) · AP Photo/Mark Schiefelbein

Even before the September job report, Fed Vice Chair Philip Jefferson and New York Fed president John Williams had already begun to temper expectations for a rate hike later this month. Both struck a more cautious tone than several of their colleagues, acknowledging that inflation has remained too high, but that the central bank should take time to assess whether it's on a downward path.

Williams said that, after raising rates in September, he sees "no need for urgency" and that "we have time to gather more information."