Download Full Report Here:
https://media.marketnews.com/Fed_Prev_Sep2026_ae817a3ff2.pdf EXECUTIVE SUMMARY *
Persistently above-target inflation readings will lead the FOMC to hike rates
for the first time since 2023 at its September meeting, with the Fed funds rate
range rising 25bp to 3.75-4.00%. * While there may be a dissent or two in favor
of a hold, overall we think Chair Warsh will lead the Committee to take action
given evidence that disinflation has stalled, recalling his Jackson Hole
declaration that "we must be confident that underlying inflation is moving to
our objective, clearly and at sufficient speed. Otherwise, we have work to do."
* We don't think the outcome will be altogether hawkish however. The 25bp hike
is largely priced and there doesn't appear to be significant appetite at this
stage for a major hiking cycle, even among Committee hawks. * As such we think
the Dot Plot will reflect a core Committee view that two or at most three hikes
will be sufficient to return policy to a restrictive enough stance to get
inflation converging to target at a reasonable pace before cuts can resume by
2028. * That's more dovish than current market pricing which shows both an 80%
implied probability of a 25bp hike at this meeting and a follow-up priced by
December, with just under 100bp tightening total to the peak over the coming
year. * Warsh is once again very unlikely to offer forward guidance on future
meetings. Even if as is likely he downplays the signal from the Dot Plot's
indication of just one more hike this year, his inflation-fighting rhetoric is
unlikely to go any further than his Jackson Hole speech, limiting the scope for
surprising hawkish takeaways from the meeting. MNI's separate preview of
sell-side analyst summaries to follow on Monday Sept 14
Sep-11 21:32
