ING THINK Sees Higher Odds for September Rate Hike

ING THINK has revised its forecast for the Federal Reserve's decision on interest rates. The organization now believes that the Fed will likely raise rates in September, unless data suggests otherwise. This shift in stance is attributed to Chair Warsh's hawkish tone at Jackson Hole, where he emphasized a focus on inflation and financial conditions.

The August data points will be crucial in determining whether the Fed decides to hike rates. A jobs report below 25k and core CPI readings below 0.2% month-on-month may prevent or delay a rate increase. ING THINK maintains its forecast of a stable Fed funds rate through 2027, but acknowledges that Warsh's emphasis on trends rather than individual data points suggests he has made up his mind.

The organization believes this will be a one-off 'risk management' hike, similar to the late 1990s. Market and consumer inflation expectations remain in check, and ING THINK expects inflation to return to 2% in the summer of 2027.