The Fed's hawkish hold is dominating macro conversations, and published research is split on what it means.
Analysts widely note the Fed kept rates at 3.50–3.75% for a second meeting, but with three dissents favoring an immediate hike — the most divided vote in years. Researchers argue Chair Warsh's deliberate retreat from forward guidance left markets without a clear reaction function, driving a sharp bear steepening: 30-year yields near 5.20% while 2-year yields fell and the dollar weakened.
One camp reads the opaque communication as a credibility risk lifting the inflation risk premium; a contrarian thread frames it as a data-dependent pivot that lowers near-term hike odds. The published consensus places September hike probability anywhere from near zero to 50–70%.
Middle East supply strains are compounding the puzzle. Recent research flags Strait of Hormuz traffic down roughly 66%, a major refinery shutdown, and extended LNG force majeure — all lifting energy prices and keeping inflation sticky.
Separately, Australia's soft trimmed-mean CPI at 3.6% has led most analysts to remove August RBA hike expectations, though some caution the reaction may be overdone.