[Wall Street Uncle] Is a rate hike a foregone conclusion? Not all 25bp hikes are the same. September (month 9) FOMC preview

The video explains that although a rate hike at the September (month 9) FOMC meeting has been priced in as the baseline scenario, the key is not whether rates rise, but distinguishing why they are raised and whether that leads to further hikes. Within the Fed, hawks who emphasize the risk of inflation spreading broadly and becoming entrenched are divided from those favoring a hold, who believe tariff and energy effects will pass and disinflation will continue. Chair Warsh's position is interpreted as relatively closer to the hawks, based on the breadth of categories experiencing price increases. August (month 8) CPI and estimated PCE were insufficient to confirm a slowdown, and oil prices emerged as a new variable amid conflict in the Middle East and disruptions to the Strait of Hormuz and alternative export routes. However, the Fed places greater importance on inflation expectations and spillovers into other prices than on the rise in oil prices itself. With employment strong, wages showing little sign of pushing prices higher, and financial conditions difficult to characterize as strongly restrictive, the video concludes that after the meeting, viewers should examine the distribution of votes, the number of officials indicating further hikes in the dot plot, Chair Warsh's explanation, and the components of long-term interest rates together.