Oct 7, 2026 · 9 min
Fed faces renewed pressure from resilient growth and inflation
Top of the Morning: State of the US economy & Fed outlook
The episode examines whether persistent inflation and solid labor data will keep U.S. interest rates higher for longer, with consequences for growth and markets.
- 1Resilient labor-market data and GDP growth suggest the U.S. economy remains stronger than policymakers would prefer.
- 2Persistent inflation and revised data reinforce expectations for one or two additional Federal Reserve rate hikes.
- 3A possible December increase, followed by further March risks, could weigh on economic growth and financial markets.
Don't miss
Andrew Dubin outlines a base case for one or two additional rate hikes, including a possible December move and risks extending into March.
The brief
UBS economist Andrew Dubin assesses a U.S. economy supported by resilient employment, GDP growth, and AI investment, even as inflation remains elevated.
The central tension is whether recent inflation and jobs data justify extending the Federal Reserve’s tightening cycle after its latest 25-basis-point hike.
Dubin’s base case allows for one or two more increases, including a possible December move and a further risk in March, with implications for growth and markets.
The discussion frames the next Fed meetings as a test of whether economic resilience can coexist with sustained progress toward lower inflation.
What was said on this episode
14 statements · 6 positive · 4 negative · 1 mixed · 3 neutral
The U.S. labor market remains solid despite slower recent job growth.
“it's still looking pretty solid”
Listen at 1:03
Recent U.S. job growth is slower but more sustainable.
“it's slower and more sustainable”
Listen at 1:47
The labor market is not generating inflation pressure.
“we don't have inflation pressures from the labor market”
Listen at 2:21
U.S. GDP growth is currently strong.
“GDP growth still pretty strong”
Listen at 3:10
U.S. GDP growth is likely to return toward 2%.
“more likely that it moves back to a more like a 2% type number”
Listen at 3:16
U.S. core PCE inflation remains elevated at 3% year over year.
“inflation is still elevated 3% year-over-year in core PCE terms”
Listen at 3:35
The Federal Reserve is unlikely to pursue hikes that disrupt economic expansion.
“we're not looking at an aggressive Fed hiking cycle that would disrupt the expansion”
Listen at 3:51
U.S. inflation is expected to continue improving.
“inflation looks like it'll continue to improve”
Listen at 4:01
The Fed will hold at its next meeting and likely hike at least once in December.
“we're expecting the Fed to remain on hold at the next meeting and then likely resume with at least one more hike in December”
Listen at 5:36
There will be substantial support for the Fed holding rates at the next meeting.
“there'll be support for remaining on hold”
Listen at 5:55
Risks favor additional Fed hikes, potentially including a third hike in March.
“The risks are definitely skewed to more hikes, so possibly a third in March”
Listen at 6:26
The base case is for one or two additional Fed rate hikes.
“the base case is one, maybe two more”
Listen at 6:43
One or two additional hikes should not significantly damage growth trends.
“that number of hikes really shouldn't have too much of a detrimental effect on growth trends”
Listen at 6:46
One or two additional Fed hikes should not significantly disrupt markets.
“it shouldn't be too disruptive for markets”
Listen at 6:54
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.