US Economics Weekly: Hold then more hikes

This weekly reviews the October FOMC meeting. UBS expects the FOMC to leave the federal funds target range unchanged in October, then raise rates by 25bp at both the December and January meetings, completing a three-hike recalibration after the September move and then pausing to assess its effectiveness. The authors argue the problem is not rising inflation or an overheating economy but roughly 3% inflation that is not clearly or quickly returning to 2%; the October skip partly reflects proximity to the midterms and most participants' preference for only one or two further hikes. Chair Warsh is expected to repeat that there is "more work to do" and to rely on the "trend not the data point" framing, with the statement likely dropping the reference to past hikes while retaining the commitment to price stability. The report also flags underappreciated midterm risks: a Democratic Senate majority could constrain confirmation of Fed governors and add uncertainty to the reaction function. Dat