Odds of more than one Fed hike are surging
Inflation spreading beyond energy
Fed Chairman Kevin Warsh’s address at last month’s Kansas City Fed symposium in Jackson Hole, Wyoming was a decisive turning point in market expectations, with hike probabilities roughly doubling in the days that followed his keynote remarks.
On inflation, his tone was unambiguous. “While this summer’s readings were better than expected, they do not tell me that underlying trends have meaningfully improved,” Warsh said. “We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do.”
The personal consumption expenditures price index rose 3.7% in the 12 months through June, while core prices rose 3.3%, with inflation described by Fed Governor Lisa Cook as too high to ignore.
The average CNBC survey CPI forecast has since climbed to roughly 3.5% for 2026, easing to approximately 2.85% in 2027.
What concerns forecasters is the breadth of the problem: roughly 75% of survey respondents now believe inflation has spread beyond energy prices into broader goods and services, making a self-correction unlikely without Fed intervention.
