JPMorgan Strategist: Rate Hike in September Will Boost Fed Credibility

JPMorgan's Global Market Strategist Stephanie Aliaga predicts that a rate hike by the Federal Reserve will bolster its credibility on inflation. The central bank has not raised interest rates in three years, and a September increase would mark the first tightening move since 2023.

The groundwork for this moment was laid in July, when the FOMC voted to hold rates steady at 3.50%-3.75%. Three regional Fed presidents dissented in favor of a hike, citing persistent inflation data and supply-chain disruptions tied to the Iran conflict.

JPMorgan Wealth Management analysts have shifted their forecasts to align with the September hike expectation, citing two primary catalysts: persistent inflation data and supply-chain disruptions from geopolitical tensions in the Middle East. The August CPI report will be closely watched as a final data point before the decision.