Economists Christopher Hodge and Selin Aker point to a shift in FOMC dynamics following the recent decision to hold rates. While Lisa Cook registered a rare dissent, the absence of pushback from previously hawkish members like Lorie Logan and Neel Kashkari suggests a broader consensus that urgent, consecutive hikes are no longer required. The committee has instead opted for a wait-and-see approach to determine if recent inflationary spikes represent a structural trend or a temporary fluctuation.
Natixis Forecasts Final December Fed Hike Before Inflation Eases
A singular rate increase in December will likely conclude the current Federal Reserve tightening cycle, according to Natixis analysts. As economic growth slows and energy prices stabilize, the necessity for further aggressive policy action is expected to dissipate, marking a definitive pivot point for the central bank’s monetary strategy.
During his press conference, Chair Warsh emphasized the economy's resilience, citing record capital expenditure and stable unemployment levels. However, he remained cautious regarding the impact of high interest rates on AI-driven investment, noting that credit markets are beginning to show increased selectivity. While the Fed remains committed to its inflation mandate, Natixis expects the combination of waning tariff impacts and cooling growth to provide the necessary relief to end the hiking cycle after December, assuming forthcoming data remains consistent with a moderating price environment.
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