Full Breakdown
Fed Weighs September Rate Move as Inflation Expectations Hold Steady
9/9/2026, 12:34:32 AM
Core Event
The Federal Reserve will decide monetary policy at its September 15-16 meeting. Market participants watch steady but elevated consumer inflation expectations, a strong labor market, and rising commodity prices that could keep inflation above the FOMC’s 2 % target.
Background & Context
The New York Fed Survey of Consumer Expectations shows one-year inflation expectations unchanged at 3.6 % and five-year expectations at 3 %; three-year expectations slipped to 3.2 %. The survey, based on a panel of 1,300 heads-of-household, recorded 44 % of respondents anticipating higher unemployment within a year—the highest since April 2020—while expected wage growth rose to 2.9 % for the next year. Commodity markets have been jolted by the ongoing Iran conflict. The 10-year Treasury yield sits near 4.80 %, reflecting market pricing of potential policy moves.
Data & Statistics
| Indicator | Figure | Source |
|---|---|---|
| 1-yr inflation expectations | 3.6 % | New York Fed |
| 5-yr inflation expectations | 3 % | New York Fed |
| 3-yr inflation expectations | 3.2 % | New York Fed |
| Unemployment rise expectation | 44 % of respondents | New York Fed |
| Expected wage increase (12 mo) | 2.9 % | New York Fed |
| Futures market probability of a hike (Sep 7) | 58.4 % | CME FedWatch |
| Futures contracts pricing a hold (Tue) | 41 % | Market data |
| Recent job growth (Aug) | 162,000 jobs | Labor data |
| Unemployment rate (Aug) | 4.1 % | Labor data |
| Core inflation (3-mo through July) | 3.05 % | Fed Gov. Waller |
Official Statements & Responses
- John Williams, President of the New York Fed, said inflation expectations remain “well-anchored” and compensation growth is “pretty contained.”
- Christopher Waller, Fed Governor, noted three-month core inflation at 3.05 % is still above the 2 % goal but highlighted a decline from 4.76 % in February, calling the trajectory “encouraging.”
Conflicting Reports & Gaps
Futures pricing shows a split: one report cites 58.4 % probability of a hike, another indicates 41 % of contracts price in a hold. Inflation forecasts also vary; Jordannews expects August CPI at 3.4 % and core inflation at 2.4 %, while the New York Fed survey suggests broader consumer expectations remain above 3 %.
Verbatim Quotes
- “The jobs number delivered a clear upside surprise and put some pressure on the metal, but it wasn't a complete slam dunk for a September rate hike. The real missing piece of the puzzle arrives this week with U.S. CPI,” — Tim Waterer, chief market analyst at KCM Trade
- “We're seeing well-anchored inflation expectations and pretty contained compensation growth,” — John Williams, New York Fed president
What’s Next
- Thursday: U.S. Producer Price Index (PPI) release.
- Friday: U.S. Consumer Price Index (CPI) release.
- September 15-16: FOMC meeting to decide on the policy rate and release updated economic projections.
