Fed Hike Expected as 'Credibility Test' on Inflation
On September 16, 2026, the Federal Reserve is expected to hike interest rates by 25 basis points, with markets assigning a 93-94.5% probability to this outcome.
Kevin Warsh's quote 'inflation is a choice' has been cited as a reason for this high probability, as it suggests that price stability is an intentional policy stance and not just an accident of central banking.
This framing of inflation as a deliberate choice rather than an external shock means that the Fed's reaction function looks decisive, and a hold on rates would be seen as a surprise and potentially softer on inflation.
The expected hike is also viewed through the lens of supply-shock caution, with some economists warning that treating every uptick in inflation as a demand choice can lead to overtightening and mistakes in monetary policy.