(Kitco News) – The Federal Reserve is unlikely to surprise markets with a rate hike at Wednesday’s meeting, but July’s trio of dissenters could return, and Warsh’s press conference could offer clues about where the central bank’s focus lies for the balance of 2026, according to Natixis.

Economists Christopher Hodge and Selin Aker wrote in Natixis’ FOMC preview that the messaging from Fed speakers on monetary policy has been mixed, with Collins, Paulson and Hammack appearing to lean toward further hikes, while Jefferson, Williams and Waller seeming to support a wait-and-see approach following the last meeting’s rate increase, and Fed chair Warsh, for his part, has maintained a neutral tone.

“After hiking for the first time in three years in September, we expect the Fed to keep its policy rate on hold at an upper bound of 4.0% when it announces its policy decision on Wednesday,” they said. “We think it is likely that the three hawkish dissenters from the July meeting (regional Fed Presidents Logan, Hammack, and Kashkari) will again dissent in favor of a 25bp point hike.”

The economists said that while it’s possible Warsh pushes for a surprise hike, they believe it’s unlikely. “In the intermeeting period, volatility in yields and some shakiness in tech/AI names have reduced the urgency to further tighten financial conditions,” they said, adding that “avoiding a surprise hike will also help to insulate the Fed from criticism from the White House.”

As for Warsh’s press conference, Hodge and Aker will be looking for signals of what he is prioritizing. “We expect him to be asked about the recent CPI report and for him to reply that he and the broader Committee are more focused on trends than any one data print, which should be perceived as giving the FOMC the flexibility to look through monthly noise,” they said. “We also expect Warsh to again mention financial conditions. Despite the recent moves in credit spreads, mortgage rates, increased yields and volatility, a mention of financial conditions should not necessarily be viewed as dovish but more as presenting two-sided risks for the Fed so long as conditions do not loosen.”

“Overall, we expect another brief press conference (September was noticeably shorter than those of the past few years) without follow-up questions and without a deep explanation of the Committee’s or Warsh’s thinking,” they added. “After some missteps early on and a desire to not reveal much, we think shorter and less insightful pressers will be the norm going forward under Warsh.”

Looking ahead, Hodge and Aker expect the Fed will remain focused on the inflation trajectory, which they expect to improve. “Despite the unusually noisy and higher CPI print for September, we remain cautiously optimistic going forward, albeit with less confidence than previously,” they said. “We think that, assuming acyclical drivers of price pressures (tariffs and higher energy costs) wane, domestically generated inflation will continue to slow and core inflation will trend down. With consumer confidence low and real wage gains flat to negative, it is difficult to envision a resurgence of demand that maintains the current pace of economic activity and that the economy remains at above potential growth.”

“Slower growth, as we are forecasting, should contribute to disinflation and prompt additional caution from the Fed to not overtighten policy,” they concluded. “As such, we are forecasting just one more hike this cycle, coming in at the December meeting, but that call is contingent on encouraging inflation data in the coming months and additional concerns about the growth outlook.”