Fidelity said the U.S. Federal Reserve is more likely to wait until December before starting a rate-hike cycle, provided inflation and labor market data continue to come in strong. At the same time, the firm said the possibility of a September hike has not been fully ruled out. In its view, economic releases over the next two months, along with geopolitical developments, could rekindle inflation risks and shift the policy outlook again. Fidelity also said the latest decision highlights a policy style associated with the Warsh era: without a clearly defined framework or forward guidance, the Fed is likely to lean more heavily on incoming economic data and changes in financial conditions when making decisions. The remarks point to a data-dependent approach rather than a preset path for rates.
Fidelity said the U.S. Federal Reserve is more likely to delay the start of a rate-hike cycle until December, assuming inflation and labor market data remain firm.
Still, the firm said a September hike has not been completely ruled out. Economic data over the next two months, as well as geopolitical developments, could revive inflation risks and alter the outlook.
Fidelity added that the latest decision highlights a policy style associated with the Warsh era: in the absence of a clear policy framework and forward guidance, the Fed will rely more heavily on incoming economic data and shifts in financial conditions.
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