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Institution Says Fed Hawkish Turn Politically Driven, Rate Hike Cycle to Be 'Short and Shallow'
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An industry research report cited by CFi.CN argues that the Federal Reserve's hawkish policy shift is politically motivated, reflecting the political cycle rather than the economic cycle. The report notes that former Fed official Kevin Warsh's stance tends to be hawkish under Democratic administrations and dovish under Republican ones, and his current hawkishness is an overcorrection to restore Fed credibility. The analysis points to August US non-farm payrolls adding 162,000 jobs, partly due to a seasonal adjustment anomaly, and core CPI rising 0.2% month-on-month, with a single mobile phone plan component contributing 10 basis points. The report predicts Q4 inflation may rise temporarily due to base effects and oil prices, not a trend. It describes the US economy as K-shaped, with consumer and housing investment slowing, and AI equipment investment insufficient to support a prolonged tightening cycle. The report forecasts a short and shallow rate hike cycle, limiting global asset pressure, and recommends buying opportunities in US and Chinese tech stocks during pullbacks, while maintaining gold as a clear overweight position.
Source report
Date: September 24, 2026 09:41:34 Source: CFi.CN
Data shows that the U.S. added 162,000 non-farm payroll jobs in August, but the increase was largely driven by seasonal adjustment anomalies—specifically, the 4-week/5-week survey interval effect contributed over 8,000 jobs. Excluding this factor, actual growth remained steady. Core CPI rose 0.2% month-over-month, with a single component—mobile phone plans—contributing 10 basis points. Excluding this, core inflation remains near the 12-month median of 20 basis points. Headline inflation may see a temporary rebound in Q4 due to base effects and oil prices, but this is not indicative of a trend reversal.
Recent institutional research reports indicate that the shift in policy stance by [Fed official] Warsh reflects political cycles rather than economic cycles: a hawkish tilt during Democratic administrations and a dovish stance during Republican ones. His current hawkish position is seen as an “overcorrection” aimed at restoring Fed credibility. The reports suggest that the policy reaction function has built-in room for adjustment, and five special task forces may lead to a future reassessment of AI and the inflation framework.
The reports also highlight a clear K-shaped divergence in the U.S. economy, with consumer spending and residential investment slowing. While AI-related equipment investment remains strong, it is insufficient to support broad-based rate hikes. The fundamental backdrop does not support a “long-cycle” tightening. Analysts expect the current rate hike cycle to be “short and shallow,” with limited impact on global assets. Historically, during similar cycles, the S&P 500, copper, and gold have mostly risen.
As a result, the pullback in U.S. and Chinese tech stocks presents an opportunity to increase allocations. Gold’s medium-term investment thesis remains intact and continues to be a clear overweight position.
CFi.CN
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中财网-行业新闻Regional
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Fed Hawkish Shift Politically Driven, Analysts See Buying Opportunity in Tech and Gold