Major global banks overwhelmingly expect the Federal Reserve to pause at the
October FOMC and leave a 25bp hike penciled in for December. Goldman Sachs,
CITIGROUP, Crédit Agricole, Nomura, TD Securities, Huatai Securities, Morgan
Stanley and BNY MELLON forecast an October pause and a December +25bp, with
several groups keeping a further 25bp move in March conditional on inflation. TD
and Morgan Stanley explicitly expect two more 25bp hikes (Dec and Mar). BNY
MELLON sees the peak rate a little above 4.5%, implying roughly three additional
hikes into next year. CITIGROUP warns that sustained equity weakness that
sharply tightening financial conditions would materially raise the odds of the Fed
pivoting toward cuts. MOODY'S says the Fed should not hike this week, citing
rising economic risks and bond-market signals that reduce the need to tighten.
Bank of America remains a notable outlier, arguing an October hike would
preserve optionality for December and better address inflation risk.
