Deutsche Bank economists expect the Fed to raise rates by 25bp in both September and December. Fed Chair Kevin Warsh’s Jackson Hole remarks stressed the need to bring inflation back to a 2% target and sent a clearly hawkish signal. Deutsche Bank says the threshold to avoid a September 25bp hike is high unless incoming data are “significantly weaker than expected.” Markets repriced rapidly: CME shows probability of cumulative 50bp+ by December rose to 51% from 29% a day earlier; probability of on

Deutsche Bank economists expect the Fed to raise rates by 25bp in both September and December. Fed Chair Kevin Warsh’s Jackson Hole remarks stressed the need to bring inflation back to a 2% target and sent a clearly hawkish signal. Deutsche Bank says the threshold to avoid a September 25bp hike is high unless incoming data are “significantly weaker than expected.” Markets repriced rapidly: CME shows probability of cumulative 50bp+ by December rose to 51% from 29% a day earlier; probability of only 25bp total is 38% and of no change is 11%. Bets on a September hike firmed after Warsh’s speech.