Markets Price In 75bp Hike in September after Powell Reiterating Hawkish Stance

Federal Reserve Chair Jerome Powell on Thursday reiterated the importance of getting inflation down now before people get too used to higher prices and to see higher inflation as the norm.

“The Fed has the responsibility for price stability, by which we mean 2% inflation over time,” Powell said. “The longer inflation remains well above target, the greater the risk the public does begin to see higher inflation as the norm, and that has the capacity to raise the costs of getting inflation down.”


After Fed’s Powell affirmed the market on his hawkish stance toward taming inflation, markets pricing in a 72bp hike on 21 September meeting with a Funds Rate of 3.82% by the end of this year and a cycle ceiling of around 3.9% in May 2023.


Meanwhile, Chicago Federal Reserve Bank President Charles Evans said that next week’s inflation data could be informative on how much the Fed should raise its policy rates in the following week.

“If I saw inflation maybe cooling a little bit that’s not going to change the fact that I still think we are going to need to top out at something like 3.5% to 4%, it’s just that maybe we don’t have to do it that soon,” Evan said.