Federal Reserve rate hike prospects United States; 60% base case Just right
Federal Reserve rate hike prospects United States; 60% base case Just right Fixed income update August 2026: actions speak louder than words Fixed income update August 2026: actions speak louder than words The case for a US rate hike is strong, but sequentially softer inflation data makes September less likely. The Federal Reserve (Fed) should hike rates. Inflation is too high, with no obvious indication it will soon return durably to its 2% target, and the labour market is stable around full employment. But we don’t think they are likely to in the next meeting. Although the case for a September hike remains strong, sequentially softer inflation data lessens the likelihood of it being delivered. For that reason, we have increased our scenario probability of ‘Just right’ to 60%, which now becomes our base case, and have reduced the probability of our most hawkish ‘Too hot’ scenario. ...