Natixis Economist Calls One More Fed Rate Hike as Core CPI Expected to Ease Slightly

The Quick Take

• Natixis chief US economist Christopher Hodge expects one additional Federal Reserve rate hike with core CPI seen easing slightly
• Higher energy prices are a headwind to inflation progress but Hodge sees the disinflation trend remaining intact overall
• The forecast implies a late-2026 terminal rate above current market pricing, with a hold-for-longer path before eventual cuts

Natixis chief US economist Christopher Hodge's call for one additional Federal Reserve rate hike represents a more hawkish stance than the current market consensus pricing a prolonged hold or early pivot. Hodge cites core CPI coming in slightly softer than forecast as an encouraging sign but flags elevated energy prices as a persistent inflation risk that prevents the Fed from declaring victory. This nuanced positioning — acknowledging progress while preserving room for one more tightening — reflects the FOMC's own stated data-dependency, where any re-acceleration in services inflation would quickly revive rate-hike talk regardless of prior disinflationary progress.

A one-more-hike forecast from a well-regarded institutional economist like Hodge has immediate market implications across multiple asset classes. Equity markets face valuation pressure as a higher terminal rate raises the discount rate applied to future earnings, particularly for long-duration growth stocks. The US dollar would strengthen on yield differentials if Hodge's forecast proved correct, pressuring emerging market currencies including the Indian rupee, Korean won, and Brazilian real. Bond markets would reprice the front-end of the yield curve higher, compressing carry for duration-heavy fixed income portfolios and extending the pain for rate-sensitive sectors including real estate and utilities.

Watch the September and October core CPI prints closely — Hodge's own base case of slight softening could be invalidated by any upside surprise driven by shelter costs or supercore services inflation. The Federal Reserve's November and December FOMC meetings are the decision points where a terminal hike would land if Hodge's forecast is correct. The macro variable that controls this entire thesis is energy price trajectory: a sustained spike in oil above $100/barrel would force the Fed's hand upward while a commodity price retreat would give policymakers sufficient cover to stay on hold and eventually pivot toward cuts.

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