Federal Reserve: Are December Rate Hike Expectations Strengthening? – Commerzbank

Pressure on the Federal Reserve to tighten policy further remains elevated as US inflation persists, according to Commerzbank’s Dr. Christoph Balz. Commerzbank maintains its forecast for another 25-basis-point rate increase at the December FOMC meeting. The report points to remarks by Fed Governor Christopher Waller, who favoured a December hike of at least 25 basis points and said a 50-basis-point increase should be considered under certain conditions.

What will the December FOMC decision bring?

"We continue to expect the Fed to raise interest rates at its next meeting in December."

"In a speech this morning before the data were released, influential Fed Governor Christopher Waller had already called for a 25-basis-point rate hike at the Fed’s next meeting in December, even if the figures came in better than in September."

"Waller said that if the monthly core reading was 0.3% (as now reported) or higher, a 50-basis-point hike should even be considered."

"This signals the direction of the debate, although we do not expect such a drastic move to win majority support on the Federal Open Market Committee."

"We continue to believe that September’s single rate hike is not enough to bring inflation down meaningfully, especially with the economy still humming and unemployment low."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)