At the Fed’s last decision in July, markets went into that pricing a roughly 30% chance that the Fed would hike. But even though the decision to hold was broadly expected and in line with the baseline market expectation, there was still a sharp steepening in the Treasury yield curve afterwards given the relative lack of detail from Chair Warsh. Since then, however, Warsh delivered a fairly hawkish message at Jackson Hole in late August, saying that “underlying trends” in inflation had not meaningfully improved, and that if underlying inflation wasn’t getting back to target, then they had “work to do”. So that raised expectations that the Fed would hike at this meeting, which was solidified by the upside surprise in the August jobs report, along with Friday’s core CPI print, which came in higher than expected at +0.3%.Our US economists are also expecting that the Fed will hike today, as growth remains solid, the labour market has rebounded, and PCE inflation has demonstrated limited evidence of falling back to target. Moreover, forward-looking indicators suggest the inflation overshoot is likely to persist for some time. Nevertheless, with a hike mostly priced in by markets, the key question for them is how Chair Warsh and the latest dot plot frame the tightening cycle. Their view is that forward guidance is unlikely, but they think the median dot should show another rate increase this year, with several officials projecting more than that.