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Institution says Fed's hawkish turn is politically driven, rate hike cycle to be 'short and shallow'
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A September 24, 2026, analysis from Chinese financial media cfi_forex argues that the Federal Reserve's recent hawkish policy shift is politically motivated rather than economically driven. Citing institutional research, the report notes that Kevin Warsh's policy stance tends to be hawkish under Democratic administrations and dovish under Republican ones, suggesting the current hawkishness is an overcorrection to restore Fed credibility. The analysis points to August US non-farm payrolls adding 162,000 jobs, but attributes much of the gain to seasonal adjustment anomalies. Core CPI rose 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 shift. It describes the US economy as exhibiting K-shaped divergence, with consumer spending and housing investment slowing, while AI equipment investment is strong but insufficient to support a prolonged tightening cycle. The analysis concludes the current rate hike cycle will be 'short and shallow,' limiting global asset suppression, 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 an anomaly in seasonal adjustment—the effect of the 4-week/5-week survey interval 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 item, core inflation remains near the 12-month median of 20 basis points. Headline inflation may see a temporary rebound in Q4 year-over-year, driven by base effects and oil prices, rather than a trend reversal.
Recent institutional research notes indicate that the shift in policy stance by [former Fed official] Warsh reflects political cycles more than economic cycles: a hawkish tilt during Democratic administrations and a dovish stance under Republicans. His current hawkish position is seen as an “overcorrection” aimed at restoring the Fed’s credibility. The research suggests 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 report highlights 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 fundamentals do not support a “long-cycle” tightening. The report concludes that the current rate hike cycle will be “short and shallow,” with limited impact on global assets. In historically similar cycles, the S&P 500, copper, and gold have mostly risen.
Therefore, the pullback in U.S. and Chinese tech stocks offers an opportunity to increase allocations. Gold’s medium-term thesis remains intact and continues to be a clear overweight position.
Source: CFi.CN
Source
中财网-外汇Eastern
Part of this Story
Fed Hawkish Shift Politically Driven, Analysts See Buying Opportunity in Tech and Gold