What smart people in business and economics are saying about the Fed interest rate hike

• The Fed raised rates by a quarter point, its first hike in three years.
• Fed Chair Kevin Warsh said the move would not immediately lower individual prices.
• Here is what economists and analysts say could come next.

Justin Wolfers, professor of public policy and economics at the University of MichiganJacob Robbins, assistant professor of economics at the University of Illinois at ChicagoOlu Sonola, head of US economics at Fitch RatingsOlu Sonola, head of US economics at Fitch Ratings, said in commentary that the inflation projections point to a “longer course of treatment” and that the “robust economy” gives the Fed room to raise rates further.

“This unanimous decision should maintain the Fed’s inflation-fighting credibility against a politically sensitive backdrop,” Sonola said on Wednesday, “But the economy’s ability to withstand higher rates should not be confused with consumers’ ability to absorb them.”

“Aggregate resilience will mask a widening divide between consumers insulated from higher rates and those being squeezed by increasingly expensive credit,” Sonola added.

Andrew Davis, head of investment strategy at Bryn Mawr Trust

Andrew Davis, the head of investment strategy at Bryn Mawr Trust and a former analyst at the Bureau of Labor Statistics, said in commentary that the latest interest-rate move reflects a Fed “less comfortable waiting for inflation to resolve itself.”

“Persistent inflation and renewed pressure from rising energy costs have shifted the balance enough that policymakers appear willing to tighten again,” Davis said.

Kay Haigh, global head and chief investment officer of fixed income and liquidity solutions at Goldman Sachs Asset Management

Kay Haigh, global head and chief investment officer of fixed income and liquidity solutions at Goldman Sachs Asset Management, said in commentary that the Fed has signaled that it’s not planning an aggressive series of rate hikes.

“Most FOMC members see a total of two hikes this year per the SEP, and it will likely skip October’s meeting given its proximity to the midterm elections,” Haigh said. “One more hike this year in December is our base case, although this remains contingent on upcoming CPI reports and the path of energy prices.”

Oren Klachkin, financial market economist for Nationwide

Oren Klachkin, a financial market economist for Nationwide, said in commentary that he expects another quarter-point hike before the end of the year because inflation is unlikely to ease significantly anytime soon.

“Our baseline forecast doesn’t expect inflation to cool meaningfully until well into 2027 and given percolating risks it could take a while for policymakers to hit their goal,” Klachkin said.

Seema Shah, chief global strategist at Principal Asset Management

Seema Shah, chief global strategist at Principal Asset Management, said in commentary the Fed’s unanimous vote suggests another hike may be necessary.

“The unanimous vote shows that rising energy prices and stubborn inflation have brought even the doves on board, making a one-and-done move highly unlikely,” Shah said.

“With markets already pricing multiple increases, policymakers will probably need to deliver at least one more hike to safeguard credibility,” Shah added.