Market sees next Fed hike in October, following Barr comments and hot inflation reading

Federal Reserve Board Governor Michael Barr speaks about “Artificial Intelligence and the Labor Market" to the New York Association for Business Economics (NYABE) in New York City, U.S., Feb. 17, 2026.Brendan McDermid | ReutersAn October interest rate hike is very much on the table after a top Federal Reserve official Wednesday expressed support for one, and as fresh economic readings showed intensifying inflation pressures.In remarks prepared for a housing conference in Chicago, Fed Governor Michael Barr said he thinks policymakers still have more work to do even after last week's quarter percentage point increase."In my base case, further policy adjustments are likely to be needed to ensure inflation comes down to target in a timely fashion," he said. "We want to support sustainable, durable growth in support of maximum employment, and price stability is crucial to that."The remarks came the same day that S&P Global said its flash gauges on both the manufacturing and services industries hit their highest levels in more than four years. The services index as measured by responses from purchase managers hit 58.7, its highest in 59 months, while the manufacturing index jumped to...