Joe Lavorgna, chief economist at SMBC, said he believes the Federal Reserve will raise interest rates in September [1].
This projection suggests a tightening of monetary policy to curb rising prices. If the Federal Reserve follows this path, borrowing costs for consumers and businesses will increase—a move often used to cool an overheating economy.
Lavorgna, a former Treasury official under Donald Trump, said the remarks during an appearance on CNBC’s ‘Squawk Box’ on Aug. 11 [2]. He said that the central bank needs to act to maintain price stability because inflation remains elevated [2].
"I believe the Fed will, and needs to, raise rates in September," Lavorgna said [1].
The economist said that the action is necessary to tackle the current inflationary environment [2]. While the Federal Reserve has not officially announced its plans for the coming month, Lavorgna's forecast points to a continued struggle to bring inflation down to target levels [1].
Lavorgna's perspective as both a private sector economist and a former government official adds weight to the discussion on how the U.S. should handle its current economic pressures. He said that the Fed will need to hike rates to tackle inflation [2].
The market typically reacts sharply to such predictions, as interest rate changes influence everything from mortgage rates to the valuation of stocks. The projected hike for September 2026 [1] remains a central point of debate among financial analysts monitoring the U.S. economy.
“"I believe the Fed will, and needs to, raise rates in September."”
A rate hike in September would signal that the Federal Reserve views inflation as a persistent threat rather than a temporary spike. By increasing the cost of borrowing, the Fed aims to reduce spending and investment, which theoretically lowers the demand for goods and services and slows price growth. This approach often creates a delicate balance for policymakers, who must curb inflation without triggering a broader economic recession.
