ING Expects One-Off Federal Reserve Rate Hike in September

ING economists James Knightley, Padhraic Garvey, and Chris Turner have revised their forecast for the Federal Reserve's rate hike in September. The team now expects a 25bp hike following Chair Kevin Warsh's Jackson Hole remarks.

The economists argue that this move will be a one-time adjustment rather than the start of a tightening cycle. They point to weak wage growth and softer housing as contributing factors to inflation converging to 2% next year, with Fed funds ultimately returning to 3.1%.

ING believes the September hike will be isolated and not part of a series of hikes. Financial markets currently price two and a half further rate hikes after the September move, but ING thinks this may not come to pass.