Multiple Institutions Predict One More Fed Rate Hike This Year
nashnova research
After September CPI and PPI both topped expectations, MetLife Investment Management and Pantheon Macroeconomics warned the Fed will likely hike at least once more this year — keeping bonds and rate-sensitive assets under pressure.
How far did September inflation overshoot?
September CPI rose 0.6% month-on-month; core inflation rose 0.3%, beating consensus by 0.1 percentage point.
Price gains spread across multiple categories, not driven by a single item.
This means → inflation is not one-off noise — broad-based price pressure is still pushing upward.
Why are two firms calling for another hike?
MetLife Investment Management chief strategist Drew Matus said September PPI data led him to expect one more Fed rate increase this year.
Pantheon Macroeconomics, drawing on CPI data, reached the same conclusion: the FOMC (the Fed's rate-setting committee) needs at least one more hike before year-end.
In plain terms = PPI (producer prices) and CPI (consumer prices) are both running hot, which means the pipeline from factory costs to store shelves has not broken. Two firms looking at different ends of that pipeline agree — a stronger signal than either alone.
When would the hike come — and is it the last?
Pantheon leans toward December — several Fed officials have signaled no rush to act immediately, making an October move unlikely.
The firm also judges this tightening cycle will not extend deep into 2027; it expects inflation to fall materially next year.
This means → if the forecast holds, this would likely be the cycle's final hike, after which the committee gains room to pivot back toward easing.
What does this mean for markets?
The two firms' aligned calls further reinforce the market's pricing of one more hike this year.
Bonds and rate-sensitive assets face sustained pressure — when rate expectations rise, bond prices fall and high-valuation equities suffer too.
Whether subsequent data show a meaningful cool-down is the key test of whether this hiking expectation materializes.
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