Hawkish September Projections Reprice the Rate Path

Key Questions

What was the year-over-year increase in U.S. import prices in June?

Import prices surged 7.1% year-over-year in June, the largest increase since 2022.

Which trading partner saw notably high import price growth?

Canada saw import prices up 20.7%.

How does this data impact the inflation outlook for the Fed?

This trade-driven inflation challenges the soft CPI/PPI narrative and provides additional ammunition for hawkish FOMC members.

The September SEP raised the 2026 policy-rate projection to about 4.1%, alongside higher inflation and longer-run rate forecasts and stronger growth and employment projections. The reported absence of projected 2027 cuts supports a higher-for-longer path, but markets must weigh continued tightening against weaker labor indicators.

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