The Fed’s Federal Open Markets Committee (FOMC) meets Tuesday and Wednesday this week with Chair Powell’s all important press event after the meeting at 2:30 on Wednesday, September 21.

Fed Chair Powell has maintained a position of telegraphing policy, and at recent speeches in Jackson Hole and before the Cato Institute he has been clear that the Fed is on a mission to reduce inflation to its goal of 2%. The August CPI increase of 8.3% was a clear signal that the Fed has more work to do.

The Fed Chair has consistently made a few points. First, they will not stop rate increases prematurely even if higher rates cause some hardship to the economy. Second, a key goal as to assure inflationary expectations don’t rise, an issue that Powell believes was a key for Volcker when he tackled inflation in the 1980s.

While there has been some speculation that the Fed would try to shock markets with a 100bps increase, in my view this would break with the current policy of telegraphing to markets what policy course the FOMC is taking and that another 75bps increase seems consistent with this course of action.

As in the past, Chair Powell’s press conference after the rate policy is announced will be key to setting expectations going forward. He will summarize the views of the...

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