Macquarie Strategist Warns December Fed Rate Hike Remains on the Table as Inflation Persists

The Quick Take

• Macquarie global FX and rates strategist Thierry Wizman says a December Federal Reserve rate hike is possible if inflation fails to moderate sufficiently
• US economy appears resilient enough to absorb another tightening move, with labor market strength keeping the Fed from committing to a dovish pivot
• The prospect of additional hikes in late 2026 adds to dollar support and complicates rate-cut expectations priced into Treasury yields

Macquarie's global FX and rates strategist Thierry Wizman has raised the possibility of a Federal Reserve rate hike as late as December 2026, a scenario the market had largely dismissed following the Fed's earlier pause signaling. Wizman's view, delivered via Bloomberg, challenges the consensus that the Fed's tightening cycle is definitively over, pointing to US economic resilience and sticky core inflation as factors that could compel policymakers to deliver one additional adjustment. The Fed has historically surprised markets with late-cycle moves when inflation proves more persistent than initially forecast, making Wizman's scenario a legitimate tail risk rather than a contrarian outlier.

A December rate hike scenario would ripple across asset classes in a materially negative fashion for rate-sensitive sectors. US Treasuries would re-price with the two-year yield rising to reflect a higher terminal rate, pressuring both equity valuations through discount-rate expansion and credit markets through tighter refinancing conditions. Emerging market currencies, including the Indian rupee and Brazilian real, face depreciation risk as a higher-for-longer dollar environment intensifies capital outflow pressure. For global equity investors, defensive and dividend sectors would underperform as the cost of capital rises, while financial sector earnings—banks and insurers—could benefit from expanded net interest margins.

The primary forward signal is the US October CPI report, which will be the most critical data input before any December FOMC decision. If core CPI prints above 3.5% again, Wizman's December hike scenario gains credibility rapidly. The macro variable that determines whether the Fed can skip a December move is wage growth: sustained deceleration in average hourly earnings would signal demand-side disinflation that allows the Fed to hold. Global investors should also watch the dollar index closely—sustained strength above 105 would itself act as a tightening mechanism through import price deflation, potentially obviating the need for a formal rate hike.

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