Fed to stay hawkish


Standard Chartered with the wrap.

Data dependent, but not yet ready to call a peak

Rates pricing for the 20 September FOMC is as flat as flat can be, reflecting soft US inflation and mixed activity. We expect the FOMC to show one more 2023 hike, in line with the June Summary of Economic Projections (SEP). However, to maintain a proper hawkish tone, we expect the FOMC to remove one of the 2024 eases. The fed funds futures market prices just under a 50% risk of one more 2023 hike and 90bps of rate cuts in 2024, so our SEP expectations area bit more hawkish than what rates markets are pricing, in our view.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.