Bai Xue, senior deputy director at Oriental Jincheng, said on Sept. 18 the odds
of one more Fed rate hike this year have risen materially, but this does not
signal the start of a sustained‑hike cycle. She cited three drivers:
the US economy is resilient but shows pronounced K‑shaped divergence, household
savings are low and consumption sustainability is weakening, and the AI
investment cycle may soften. Long‑end US Treasury yields are near 2007 highs,
producing a spontaneous tightening in financial conditions that is materially
constraining rate‑sensitive sectors, so the Fed must weigh cumulative tightening
effects. The intended purpose of the move is to anchor inflation expectations
and guard against re‑anchoring—a tactical, phase‑specific adjustment rather than
system‑wide tightening to counter an overheating economy or wage‑price spiral.
Current inflation appears a cyclical rebound, not a sustained wage‑price loop,
and fundamentals do not support prolonged hikes. If a September hike is
implemented and December inflation remains strong, another hike is possible;
thereafter the Fed would observe inflation progress at a 4.00%–4.25% policy
range before deciding whether to hold, tighten further or pivot to cuts.
