Fed Rate Hike Odds Climb as Strategist Bets Against September Move

Hightower Advisors' chief investment strategist Stephanie Link says she doesn't expect the Federal Reserve to raise interest rates in September. This contradicts market-implied odds, which have climbed sharply since Fed Chair Kevin Warsh's Jackson Hole speech. The CME FedWatch tool shows a 66.4% probability of a 25-basis-point hike, up from just 39.6% a week earlier.

Link believes that the Fed may be waiting to see whether the artificial intelligence investment boom translates into stronger productivity growth before making a move. She also pointed to the Fed's newly formed committees as a factor shaping Warsh's approach, saying he'll rely on their findings and is looking for additional tools to more accurately track inflation.

Markets have moved sharply toward a hike since Warsh's Jackson Hole remarks, which reaffirmed the Fed's 2% inflation target and said financial conditions were not currently restrictive. Veteran investor Louis Navellier told Benzinga he'd be 'shocked' if the Fed hikes in September, arguing that Warsh's five new task forces haven't yet completed their work.

The Fed's interest rate decision will be announced on Wednesday, Sept. 16.