FOMC Preview: A nudge to hasten the disinflation

Key arguments

• Natixis expects the Fed to raise the policy rate to an upper bound of 4.0%, the first hike in three years and first under Chair Warsh.
• August core CPI came in above expectations on one-off factors, cementing expectations of a hike; policymakers show less tolerance for such factors.
• Only minimal tweaks are seen as necessary given Natixis' optimism on disinflation; the hike may be one-and-done.
• The median 2026 dot may rise to 4.1%, implying another hike, but wide dispersion blunts the signal.

Corresponding source evidence

1. +1 929 688 6923 selin.aker@natixis.com Discover more on our Website FOMC Preview: A nudge to hasten the disinflation We expect the Fed to, for the first time inthe Warsh era, raise its policy rate to an upper bound of 4.0% at this week’s meeting, but we expect little signal about what will come next. · this week
2. Chair Warsh will likely emphasize that this meeting’s decision isdiscrete and does not pre-commit the Fed toany actions insubsequent meetings, giving he and the Committee maximum flexibility to respond to shocks.
3. US MACRO INSIGHTS 2 What to expect on Wednesday We expect the Fed toraise its policy rate toan upper bound of4.0%, marking its first rate increase in three years and the first in the Warsh era.