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Citi Warns Higher Risk Fed September Rate Hike

By Drooid · Sep 12, 2026, 2:06 PM UTC · How we work

Summary

Fed Hikes Rates

Federal Reserve (Fed) is expected to raise its benchmark rate by 0.25 percentage point at the Sept. 15-16 meeting.
Core CPI rose 0.3 % in August, above the 0.2 % forecast.
Headline CPI increased 0.4 % month-over-month and 3.4 % year-over-year.
DeFi Rate’s cross-venue probability rose to 81.3 % and CME FedWatch to about 85 % after the data.
Citigroup warned of higher-than-market risk of a September hike, abandoning earlier cut forecasts.

Summary

Trump Promises Dividend

President Donald Trump pledged a $5,000 dividend to every American adult if Republicans win Congress in November.
Commerce Secretary Howard Lutnick said the dividend would not be funded with taxpayer money.
Federal Reserve (Fed) Chair Kevin Warsh said markets have done much of the tightening, drawing criticism from Governor Christopher Waller.
Analysts warn a looming Canada trade war adds pressure on the Fed’s rate-decision calculus.

History

Historical Context

In 1979, Federal Reserve Chairman Paul Volcker, under President Jimmy Carter, launched an aggressive tightening campaign that pushed the federal funds rate to historic highs. In 1980, the funds rate reached 20% as inflation eased, a decline noted by President Carter and the Bureau of Labor Statistics. Today's Fed deliberations on a 0.25-point hike and promises of a $5,000 dividend echo Volcker’s era, where tightening intersected with agendas voiced by Kevin Warsh. The 1979 shock taught policymakers that rate moves can curb inflation but also trigger recession, warning that current decisions may reshape growth and electoral dynamics.

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Fed Hikes Rates

Federal Reserve (Fed) is expected to raise its benchmark rate by 0.25 percentage point at the Sept. 15-16 meeting.
Core CPI rose 0.3 % in August, above the 0.2 % forecast.
Headline CPI increased 0.4 % month-over-month and 3.4 % year-over-year.
DeFi Rate’s cross-venue probability rose to 81.3 % and CME FedWatch to about 85 % after the data.
Citigroup warned of higher-than-market risk of a September hike, abandoning earlier cut forecasts.

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