Fed decisions (Jul–Oct)Other

"We expect a unanimous vote for a hike on Wednesday: 2 or 3 implicit dissents via 3.625 year end dot, but no explicit dissents on the vote itself. We struggle to completely discount the risk that Warsh’s Jackson Hole speech was purely performative and he could in fact try to jam through a hold, but equally cannot fathom a world where he commits what would be construed as the policy error of all policy errors and holds rates. We have no position in the meeting, but for choice think the former is more likely given past precedent, and would rather rec from 23bps priced. Warsh’s characterization of how data influenced the decision to hike is the million dollar question. His blundered “in two words, ‘not much’” response during the July press conference resulted in the first leg of ct30’s ensuing meltdown; we expect a more calculated answer on Wednesday which acknowledges at least an implicit reaction function to subsequent data prints. We struggle to rationalize the argument against *continuing* a hiking cycle in advance of the midterms, but likewise see little asymmetry in paying the jump at 12.5 given our 3.875 dot forecast The 2027 dot is a close call between 3.875 and 3.625. More interesting will be the ’27 Core PCE forecast, and extent to which other submitters join Waller in incorporating methodological adjustments into their ex-ante forecasts; we don’t envy the communication task force having to explain the .04bp/month drag from portfolio mgmt. fee recalculation just as Warsh tries to minimize focus on the decimal place minutia." - Brian Bingham GSRates, Short Macro Trading

Live: Officials at the Federal Reserve feel relatively confident about the state of the labor market, with the unemployment rate low and monthly jobs growth stable. Instead, they are chiefly focused on inflation, which is running well above the central bank’s 2 percent target. Policymakers are debating the need to raise interest rates to tame price pressures, which have been exacerbated by the energy shock caused by the war with Iran and the lingering impact of President Trump’s tariffs, among other factors. The labor market is not considered a main driver of inflation, with wage growth steady but not accelerating.