Hold Steady or Raise Rates? Chairman Warsh and His Hawkish Team

Rabobank expects the FOMC to maintain the federal funds rate target range at 3.75-4.00% at its October 27-28 meeting. Hammack, Kashkari, and Logan are likely to dissent in favor of a rate hike, as they did in July. Chairman Warsh is expected to continue the hawkish tone from the Jackson Hole symposium, providing no forward guidance and only stating that the underlying inflation trend has not improved significantly, without explicitly mentioning an imminent rate hike. The bank expects the FOMC to raise rates in December, hold rates unchanged through 2027 according to the median dot plot, and begin cutting rates in the first quarter of 2028.