Mufg us macro strategy central bank view september 2026 fomc preview v3

Key arguments

• MUFG's base case is a neutral 25bp hike with a 12/0 vote, justified by balanced labor market and sticky inflation.
• SEP expected to raise 2026 median dot to two hikes and nudge long-run dot to 3.125%, retaining future cuts.
• A dovish hike (20%) would follow from multiple dissents or Warsh signaling no hiking cycle; a hawkish hike (20%) if dots show no 2027 cuts.
• Markets price more hikes than the Fed is likely to deliver; second-round oil effects and slow disinflation are the main hawkish drivers.

Corresponding source evidence

1. Dovish Hike 20% ▪ If there are multiple dissents for a hold, the dots do not project 2 hikes for the balance of 2026 (and maintain multiple cuts to reach long-run dot), and/or Chair Warsh ’s tone implies that hiking now is not indicative that a hiking cycle has started (one and done?), these would individually or collective be dovish. · 2026
2. Neutral Hike Base-Case 55% ▪ Statement: We expect language to remain largely the same, highlighting the balanced nature of the labor market following a strong August NFP report and the relative strength of economic growth, though it may include a reference to the “persistent stickiness” of inflation being above target to justify tightening by an incremental 25 bps.
3. We expect Chair Warsh to try to aim for a 12/0 vote in favor of a hike.