Fed signals another rate hike ahead: Charles Luke on why the economy is accelerating, not slowing

Oct 7, 2026

The Federal Reserve is on track to raise interest rates again before year end, according to minutes from the latest Federal Open Market Committee meeting. All Fed officials supported raising the federal funds rate by a quarter percentage point to a target range of 3.75% to 4%, though no timing was given. What do the minutes tell us about the economy’s direction? Despite negative consumer sentiment, the committee described an economy expanding at a solid pace, with the labor market near full employment and inflation elevated with upside risks. Some officials warned that keeping policy too easy could unanchor inflation expectations, signaling that rates may stay higher for longer than markets expect.

That economic strength contrasts sharply with how consumers feel — a disconnect Charles Luke, chief investment officer of City National Bank and RBC Rochdale, addressed head-on in commentary featured in U.S. News and World Report: “Consumers continue to feel awful, but it hasn’t affected their willingness to spend,” Luke wrote. “Real spending just posted its strongest month in over a year, factories are in their ninth month of expansion and data center construction is up 73% from a year ago. Watch what people do, not what they tell you in a behavioral survey. This economy is accelerating, not slowing, even if the mood is sour.”

The takeaway for investors is the gap itself: sentiment and fundamentals are telling different stories, and that divergence is worth watching. How investors respond depends on individual goals, risk tolerance and time horizon.

Read the full article in U.S. News & World Report: Fed Telegraphs Another Interest Rate Hike This Year.