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Fed Decision Tonight: Inflation Heats Up, But Rate Hikes Paused? Waller Faces a Major Credibility Test
Author: Xu Chao, WallStreetCN
Despite September’s inflation data continuing to overshoot expectations—core CPI rose 0.3% month-on-month (above the forecasted 0.2%) and climbed year-on-year to 2.6%, with its three-month annualized pace surging from 2.0% to 3.4%—the Federal Reserve is all but certain to pause its rate hikes this week. This stark divergence has shifted full attention to tonight’s press conference: How will Powell explain the pause amid persistently elevated inflation—well above the Fed’s 2% target—while preserving the central bank’s policy credibility?
According to the latest Reuters survey, 94 out of 100 economists polled expect rates to hold steady in the 3.75%–4.00% range; CME Fed Funds futures imply only about a 10% chance of a hike, while Goldman Sachs’ equity volatility desk estimates an even lower, swap-implied probability of just 7%.
September CPI data
Despite September’s inflation data continuing to overshoot expectations—core CPI rose 0.3% month-on-month (above the forecasted 0.2%) and climbed year-on-year to 2.6%, with its three-month annualized pace surging from 2.0% to 3.4%—the Federal Reserve is all but certain to pause its rate hikes this week. This stark divergence has shifted full attention to tonight’s press conference: How will Powell explain the pause amid persistently elevated inflation—well above the Fed’s 2% target—while preserving the central bank’s policy credibility?
According to the latest Reuters survey, 94 out of 100 economists polled expect rates to hold steady in the 3.75%–4.00% range; CME Fed Funds futures imply only about a 10% chance of a hike, while Goldman Sachs’ equity volatility desk estimates an even lower, swap-implied probability of just 7%.
September CPI data
