Link Sees No Rate Hike in September, Cites AI Boom

Hightower Advisors' chief investment strategist Stephanie Link said she doesn't expect the Federal Reserve to raise interest rates in September, despite market-implied odds of a hike climbing sharply since Fed Chair Kevin Warsh's Jackson Hole speech.

Link stated that '25 basis points is not going to hurt that much,' but expressed skepticism about the need for a rate hike now. She pointed out that Warsh may be waiting to see whether the artificial intelligence investment boom translates into stronger productivity growth before making a move.

The Fed's newly formed committees, which are assessing AI's potential impact on the economy, could also influence Warsh's decision. Link noted that Warsh has indicated he'll rely on their findings and is looking for additional tools to more accurately track inflation.

Market-implied odds of a 25-basis-point hike have increased to 66.4% from 39.6% following Warsh's Jackson Hole remarks, which reaffirmed the Fed's 2% inflation target and said financial conditions were not currently restrictive. Some analysts, such as Louis Navellier, believe that Warsh's five new task forces haven't yet completed their work, while others argue that sticky services inflation and resilient economic data warrant further tightening.