Fed Rate Hike Probability Drops as Walsh Expected to Hold Steady

Natixis strategist predicts Fed Chair Walsh will avoid a 25bp hike to protect labor markets, despite inflation targets remaining out of reach by year-end.

Woofun AI reports that Mabrouk Chetouane, Head of Global Market Strategy at Natixis Investment Management, stated in a report that Fed Chair Walsh is unlikely to challenge the current consensus during his second meeting of the Monetary Policy Committee. Chetouane noted that Walsh will not succumb to the temptation of a 25-basis-point rate hike, although at this stage, bringing inflation back to target levels by year-end is almost unattainable.

Furthermore, Walsh is not expected to risk disrupting the slow but steady improvement in the labor market—a trend that has persisted for several weeks—by tightening monetary conditions. Analysts generally expect the Fed to hold steady on Wednesday, but money markets reflect a 38% probability of a rate hike.