Heading into the September 16 FOMC decision, swaps and futures markets imply roughly 60% odds that the Fed lifts its target range to 3.75%–4%.That puts the market and the White House on opposite sides of the same question. President Trump has again pressed policymakers publicly to cut, arguing that elevated rates leave the United States at a competitive disadvantage and saying he will not allow that to continue.
The Fed goes into this decision with less public goodwill than usual. A recent Gallup survey found just 33% of U.S. adults rated the Fed’s board as doing an excellent or good job, while 27% called its performance poor. A central bank operating under that much political and public scrutiny has fewer quiet options than one working out of the spotlight.
We wrote last week that the data, not any single official’s comments, would set the tone for this meeting. That remains our view, and Friday’s CPI report is the number that matters most, currently expected at 3.40%. What has changed is the balance of probabilities.
Whichever way the Fed leans, it risks criticism from one side or the other, there’s no version of this decision that satisfies everyone.
