Macquarie Predicts Fed May Restart Rate Hikes in Q4, Benchmark Rate Could Be Normalized

Macquarie's View: Rate Hike Possibility Rises

While markets widely expect the Fed to hold rates steady this week, economists David Doyle and Chinara Azizova from Macquarie suggest that the upcoming U.S. monetary policy could lean toward tightening. They argue that the benchmark interest rate may have already reached a "normalized" level, with a potential rate hike expected as early as the fourth quarter of this year.

Other Firms Also Update Forecasts

Macquarie is not the only institution revising its stance. Earlier this month, JPMorgan adjusted its outlook, projecting that the Fed will keep its target rate between 3.5% and 3.75% through this year and likely raise rates by 25 basis points in Q3 2027.

Disconnection Between Market Bets and Reality

Despite growing market expectations for rate cuts, evolving economic data and inflation trends could influence the Fed’s final decisions. The path of future monetary policy remains uncertain.