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Ben chabot
@chabot_ben
Professor at Northwestern University. Teach finance at UC-Booth. Former Economist and Senior Policy Advisor at Federal Reserve and Professor at UMich and Yale.
Joined June 2014
263 Following    5.8K Followers
The CPI came in hot enough to move Fed Fund Future implied odds of a September hike to 85%. However, the inflation reading was cool enough that the market expectations for the end of the tightening cycle didn't move much. The FF future implied odds for year-end remained centered around 2 hikes and the odds of more than two hikes by year end increased by only 2% while the odds of 1 or fewer hikes declined by just under 5%. Future prices still see 3 hikes by mid-2027 as the likely stopping point and today's CPI report actually lowered uncertainty about that estimate. The FOMC rarely surprises the market at a regular scheduled meeting. If they were to leave rates unchanged next week this would be the biggest "surprise" at a schedule meeting since 1994 when the Fed held rates fixed despite the market pricing in a rate hike.
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