Economists at TD Securities said an October Federal Reserve rate rise was becoming more probable, as recent central bank commentary stayed hawkish and officials continued to flag further tightening. They pointed to firm PCE inflation signals alongside modest gains in the ISM Manufacturing data, while September’s NFP was softer and the unemployment rate higher, leaving policy expectations tethered to whether inflation cools and whether the labour market holds up.
Inflation and Spending Outlook
In their outlook, PCE inflation is projected at 0.38% m/m and 3.8% y/y for the headline measure, with core seen at 0.32% m/m and 3.4% y/y, and attention focused on the BEA’s annual revisions. They also forecast spending growth of 0.9%, or 0.5% in real terms, after strong retail sales.
Federal Reserve Policy Expectations
The economists expect two additional Fed hikes, pencilled in for October and January, with the timing and scale guided by incoming inflation data and labour-market resilience.
