Markets are pricing in an 85 % probability that the Federal Reserve will not raise interest rates in October, a view supported by comments from Fed Vice Chairman Jefferson and New York Fed President Williams. However, new Fed Chairman Kevin Warsh delivered a hawkish message at his Jackson Hole speech, emphasizing that inflation remains a greater concern than the labor market. Recent inflation data showed consumer prices rising 3.7 % year-over-year and producer prices gaining 6.3 %, with core PCE expected at 3.1 %. This divergence between Warsh’s hawkish stance and his lieutenants’ more dovish remarks leaves room for a potential October rate hike, defying market expectations.
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