September Fed Hike Odds Jump to 66.1% After Warsh Signals Inflation Resolve
Updated
Updated · CNBC · Aug 31
September Fed Hike Odds Jump to 66.1% After Warsh Signals Inflation Resolve
3 articles · Updated · CNBC · Aug 31
Summary
66.1% odds of a Sept. 15-16 rate hike were priced in Monday, nearly double pre-speech levels, after Kevin Warsh's Jackson Hole remarks convinced markets he is prepared to tighten soon.
Warsh said soft recent inflation readings do not show underlying trends have "meaningfully improved" and stressed the Fed must see inflation moving toward its 2% goal at sufficient speed.
Skeptics including Treasury Secretary Scott Bessent and Citigroup argue the market reaction overstates the case, citing a supply shock, restrained core inflation and softer hiring that may leave no September consensus for a hike.
Upcoming payrolls, CPI, PPI, housing and retail sales data now stand between Warsh and a move, with strategists saying labor-market weakness could still dissuade the Fed.
The repricing follows a July meeting where 3 of 12 FOMC voters backed a hike, while Bank of America says Warsh has raised the bar for standing pat and risks losing credibility if he does not deliver.