Natixis sees further rate hikes as Fed chair downplays restrictive policy

Christopher Hodge and Selin Aker of Natixis describe the FOMC’s recent rate hike as the path of least resistance. While the move does little to curb inflation immediately, it provides policymakers with the necessary breathing room to evaluate whether the August inflation spike represents a temporary anomaly or a persistent trend. Because stringing together consistent disinflationary data remains difficult, the analysts expect another hike in December or January.

Central to this outlook is the perspective of Fed Chair Kevin Warsh. Unlike Governor Waller, who has characterized current policy as moderately restrictive, Warsh maintains that the committee is simply removing a dose of accommodation. If Warsh’s view aligns with the majority of the committee, the path toward additional rate increases becomes more likely. Although the median projections suggest a pause in 2027 and a cut in 2028, the significant dispersion in the "dot plot" underscores a lack of consensus. Ultimately, the Fed remains tethered to incoming data prints, which are expected to remain noisy and decisive for future policy adjustments.