Former Fed economist and "Sahm Rule" creator Claudia Sahm advocates for a 25-basis-point interest rate hike in October, arguing that waiting poses greater risks than acting. Despite market-implied odds of an October hike dropping from 70% to 17% over the past three weeks, Sahm points to deteriorating inflation data as justification for immediate action.
Key indicators cited include August PCE inflation rising to 3.4%, September core CPI annualizing at approximately 4%, and transportation and warehousing price gains reaching their highest levels since 2022. Sahm contends the Fed's primary concern should not be hiking too much, but rather being forced into aggressive measures later if inflation spirals out of control. She argues that without an October hike, the Fed lacks concrete evidence demonstrating its commitment to returning inflation to the 2% target.
"Sahm Rule" Creator Urges October Fed Rate Hike Amid Rising Inflation Signals
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