Federal Reserve officials agreed on raising interest rates last month but differed over the rationale, leaving questions about the path of further tightening, minutes released Wednesday showed.

Looking ahead to the final two Federal Open Market Committee meetings of the year, the minutes noted that "most participants assessed that another increase in the target range for the federal funds rate would likely be appropriate by year end." But officials also said they would approach each meeting with "an open mind" and that future decisions would depend on incoming data.

The minutes of the Sept. 15-16 FOMC meeting showed that officials unanimously supported raising the fed funds rate by a quarter percentage point to a range of 3.75% to 4% last month.

"Based on the outlook and the changing balance of risks, all participants viewed a higher target range for the federal funds rate as appropriate," according to Wednesday's minutes. "Participants judged that this would support a timelier return of inflation to the committee's 2% goal."

The minutes highlighted that "many" officials emphasized that higher rates would be "prudent on risk-management grounds," acting as insurance against inflation remaining persistently high due to the risk of supply shocks.

New York Fed President John Williams, for example, said last week that he expected just one additional rate increase this year, likely in December.

Still, the minutes said that "a number of participants" viewed higher rates as necessary based on their economic outlook, rather than as a risk-management measure. That tracks with recent remarks from Dallas Fed President Lorie Logan, who called for increasing the federal-funds rate by another half a percentage point.

The data released since the FOMC meeting showed weaker-than-expected job growth in September. Employers added just 29,000 jobs and unemployment rose to 4.2% from 4.1% in August. Yet one of the "key changes" that prompted the Fed to raise rates was increased labor-market stability, Fed Chair Kevin Warsh said at the post-meeting press conference.

Moreover, while underlying inflation remains persistent, methodology changes implemented by the Bureau of Economic Analysis led to a downward revision in July's year-over-year increase in the personal consumption expenditures price index, to 3.4% from 3.7%. In August, PCE inflation rose 3.4% year over year and core, which excludes food and energy costs, rose 3%.

The latest report did little to alter the broader inflation narrative, but many analysts believed it could give Fed officials some leeway to take a gradual approach to tightening policy, skipping a rate increase at the upcoming Oct. 27-28 meeting.

Looking ahead, with the labor market still stable, policymakers will likely continue to focus on their price stability mandate. That means inflation data will continue to drive the committee's decisions. The September reading of the consumer price index will be a key input, for example, in the committee's decision to raise or hold rates at the Oct. 27-28 meeting.

The Bureau of Labor Statistics is set to release the latest CPI inflation data on Wednesday, Oct. 14.

The odds of an October rate increase stood at just 19% as of Wednesday, little changed from their levels a day prior and down from about 38% a week earlier.

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The Federal Reserve's upcoming meeting minutes could signal whether officials view September's interest rate increase as a small policy adjustment or the start of a broader hiking cycle.

The Federal Open Market Committee voted to raise its target range for the federal-funds rate by a quarter of a percentage point to 3.75% to 4% at the conclusion of its September policy meeting. It was the first time since December 2025 that the Fed changed interest rates, and the first increase since July 2023.

The Federal Reserve will release the minutes of its Sept. 15-16 policy-setting meeting on Wednesday at 2 p.m. Eastern. The minutes could shed more light on the committee's appetite for further hikes and how hawkish policymakers are.

"While the committee voted unanimously, investors will be looking for clues on whether there is meaningful disagreement over how much additional tightening may be needed," writes Antonio Gabriel, global economist at Bank of America Securities.

Chairman Kevin Warsh indicated that September's rate increase was driven by underlying inflation failing to cool quickly enough toward the 2% target. He characterized the September as removing "a dose of accommodation," rather than a major course correction.

The latest summary of economic projections, however, signaled limited appetite for further increases, with the median projection for the federal-funds rate at 4.1% at the end of both this year and next. That implies just one additional rate increase in 2026 and none in 2027.

The limited number of projected rate increases contrasts with the Fed's historical tightening cycles. In nearly all of the Fed's six tightening cycles since 1994, the initial rate increase was followed by at least five additional increases, writes Franklin Templeton's Chris Galipeau.

Most economists expect Wednesday's minutes to read more hawkish, but since the FOMC meeting, officials' remarks have been mixed on the number of rate hikes investors should expect at the two remaining meetings of 2026.