On Sept. 16 (local time) the Fed raised the federal funds target range to
3.75%–4.00% at the September 2026 FOMC. Liu Sijia at Donghai Securities said the
25bp hike was largely priced in (pre-meeting odds >90%), reflects hawkish
Jackson Hole messaging, and should help restore perceptions of Fed independence
while reducing upside term-premium risk on the long end of the U.S. Treasury
curve. CME pricing shows ~50% odds of an October hike and roughly 90% odds of
one more move this year, broadly consistent with the dot plot. Donghai cautioned
that, absent supply-driven oil inflation spillovers, a K-shaped U.S. economic
divergence and a weak labor-market equilibrium with declines in both labor
supply and demand do not support the Fed launching a cycle of consecutive hikes.
A Fed official said current financial conditions are not restrictive and this
move simply removes some accommodation; whether a run of consecutive increases
begins remains uncertain.
