Philip Marey expects the Fed to leave rates unchanged at its Oct. 27-28 meeting before raising them in December, a path that would match the median year-end projection.
The Fed’s policy-setting Federal Open Market Committee (FOMC) meets Oct. 27-28. The committee voted unanimously in September to add 25 basis points, setting a 3.75%-4.00% range. The Fed’s next economic projections are due in December.
September’s median outlook included one additional rate move in 2026; four participants’ projections pointed to two increases before year-end. Marey thinks Hammack, Kashkari and Logan, who dissented in July, may be among those four, but says another dissent from them this month is uncertain.
Marey’s central case is an October pause followed by one increase in December. He expects that move to put the federal funds rate at the median level projected for year-end in September. He considers a 50-basis-point increase in December less likely.
For 2027, Marey’s baseline leaves rates unchanged, in line with the September median outlook. He sees further increases as a risk if inflation rises. His forecast puts consumer price inflation at 2.2% in the final quarter of 2027, which he says could make an initial rate cut in early 2028 possible.
Marey expects Fed Chair Kevin Warsh to avoid signaling an imminent increase at the post-meeting news conference. He expects Warsh to say the underlying inflation trend has yet to improve meaningfully, without indicating that a hike is near.
Marey’s December view follows an earlier EconoTimes report on SMBC economist Joe Lavorgna’s view that a December Fed increase was becoming more likely. The FOMC’s next policy decision is scheduled for Oct. 27-28.
