$First Commonwealth Financial (FCF.US)$ Market analysis: The...

Schwartz, a senior economist at the Oxford Institute of Economics, said that there is uncertainty within the Fed on many issues, including the cumulative impact of monetary policy tightening and the extent to which tight credit conditions will inhibit economic activity. “What can be confirmed, however, is that inflation is still too high. Given the goal of returning the inflation rate to 2%, the policy will be biased towards maintaining an austerity stance and will not rule out continuing interest rate hikes.” he said. Schwartz believes that the benchmark assumption is that the Fed has reached the end of the current rate hike cycle. Of course, if there is an unexpected increase in data from now until the eve of the September meeting, then the risk of another rate hike will increase. “Since inflation may be volatile, market participants are re-evaluating the Fed's position on federal funds interest rates, and interest rate cuts seem far off.” he said.