Reasons that bolster the case for an additional US rate hike.. what are they?

Amid sharp volatility in dollar's pricing and US treasury yields, markets are speculating about an additional US interest rate hike before the year end.

Thus investors are now focused on analysing fresh data that might shed light on such a prospect occurring in November or December. 

Here we're trying to enumerate the likely factors and reasons that might push the Federal Reserve to raise interest rates once more. 

Bullish Remarks

The Federal Reserve released its quarterly forecasts report last week, crucial for gauging the path ahead for interest rates and policies.

The forecasts were far more aggressive that expected, especially with growth, inflation, and interest rates. 

The Fed raised the US growth forecast in 2023 from 1% to 2.1%, and for 2024 from 1.5% to 1.5%. 

Such an uptick in growth forecasts reflect a positive view for economic activity in the country despite the higher US interest rates. 

The Fed also raised inflation forecasts in 2023 from 3.2% to 3.3%, while holding the 2024 forecast at 2.5%. 

Such forecasts delineate the Fed's view on stubborn inflation rates in the foreseeable future through 2025, thus necessitating higher interest rates for a longer duration.

The Fed also maintained its forecasts for 2023 interest rates at 5.75%, indicating another US interest rate hike in November or December.

The Fed also expected only 50 basis points worth of rate cuts in 2025 and 2025, down from 100 basis points in previous forecasts. 

US Inflation

Recent US data showed consumer prices rose past estimates in August, while producer prices and US retail sales also rose past estimates last month.

Such data indicates that inflation remains stubborn and raises the pressure on Fed policymakers. 

Global Oil Prices

The recent surge in global oil prices to 10-month highs on track for $100 a barrel also boosted inflation rates worldwide and renewed concerns of an extended battle with inflation. 

US Economy

Recent US data showcased the flexibility and resilience of the US economy, in turn giving the Fed some leeway in tightening monetary policies even further. 

Powell

Fed Chair Jerome Powell said following last week's meeting that controlling inflation and bringing it down to 2% is a long-term process, and another interest rate hike won't impact the total economy much and could help efforts to contain inflation.