The article analyzes three macroeconomic variables relevant to the US Federal Reserve's (Fed) decision regarding a possible interest rate hike in September. These variables are: the war in Iran, high oil prices, and labor market behavior.
Although the war in Iran and high oil prices make a rate hike in September a plausible possibility, the author identifies factors pointing in the opposite direction. Namely, the absence of second-order effects on inflation, the cooling of the labor market, and the rise in Treasury yields themselves.
Based on this analysis, the author maintains his forecast that the Fed will stay put, meaning it will not proceed with any interest rate hike at the September meeting. This position is based on the assessment that the factors against a rate hike outweigh those in favor.
