Fed Rate-Hike Odds Return to a Coin Flip — SkimNews
Get the Finance newsletter
Daily finance — markets, central banks, M&A, the prints that move money. Free.
- Kevin Warsh said the Fed must be confident underlying inflation is moving toward its objective at sufficient speed or policymakers have “work to do,” creating room for a judgment call.
- Christopher Waller said he would be inclined to hold rates steady if two months of improving inflation continue through August, but would support a hike if the improvement proves fleeting.
- John Williams said policymakers must “wait and see” whether an increase is needed, adding that current evidence does not show whether policy is sufficient or further action is necessary.
- CME FedWatch put the probability of a Sept. 16 rate hike at essentially a coin flip, reversing market positioning that favored an increase on Wednesday.
- Three reserve bank presidents dissented at the late July meeting in favor of a hike, underscoring internal Fed disagreement before the September decision.
- Waller criticized Warsh's reticent communication style, arguing that markets need a rough, reasonably stable understanding of the Fed's reaction function rather than changing signals pitch by pitch.
Why it matters: Chairman Warsh retains unusual discretion because leadership is split: Waller prefers a hold if disinflation persists, while three reserve-bank presidents dissented in July for a hike. The near-coin-flip odds leave neither outcome commanding market confidence before the Sept. 16 decision.
Ask SkimNews
