The Fed’s July hold was a setup for a September hike, veteran broker says
“So I wouldn’t characterize what we did as anything like a pause,” Warsh said at the press conference. “I would characterize what we did as a rigorous review of the economic situation. I would characterize it as a review of the big, hard questions, and a view of what our own homework is, to try to resolve those questions in the period ahead.”
Cohn said Warsh’s language in the post-decision press conference combined with the three dissenting votes told her what she needed to know about September.
“I would be very surprised if we didn’t see a rate hike at the next meeting,” she said. “I think that there are people who were in favor of looking towards a hike in the near future, but perhaps remaining on pause for just this meeting.”
Cohn said political timing is also a factor, with Warsh needing to act before the calendar gets crowded with pre-election politics.
“If the Fed’s going to make a move, it’s going to be in September,” she said. “It’s not going to be later in the fall just before the election. He has to deal with Trump. And we also remember that the Fed tries to remain apolitical.”
