Markets expect two Federal Reserve hikes by year-end as inflation risks persist

  • Markets fully expect two Federal Reserve rate increases before year-end.
  • Claudia Sahm supports a 25-basis-point September increase and 50 to 75 basis points by year-end.
  • Stephanie Link expects the Federal Reserve to leave rates unchanged in September.

Markets fully expect the Federal Reserve to raise interest rates twice before year-end, according to Jin10 coverage cited by PANews on Sept. 11, though the supplied accounts show disagreement over the timing and scale of any initial move. Jeremy Siegel, identified in newer material as WisdomTree's chief economist, said markets appear to be signaling a need for a rate increase and that Fed Chair Kevin Warsh could face pressure to act despite potential political backlash from President Donald Trump. Siegel said a hike could initially weigh on stocks but support a recovery if long-term bonds respond positively to restored confidence in the Fed's inflation-fighting credibility. Stephanie Link of Hightower Advisors expects no September increase and sees December as a possible timing for a hike, while former Federal Reserve economist Claudia Sahm supports a quarter-point September increase and a total of 50 to 75 basis points of tightening by year-end. CPI data, jobs figures, inflation readings and officials' comments remain central to the policy outlook.

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