JPMorgan’s Aliaga predicts rate hike will bolster Fed credibility

The Federal Reserve might finally do something it hasn’t done in three years: raise interest rates. Stephanie Aliaga, Global Market Strategist at JPMorgan Asset Management, told Bloomberg’s “Open Interest” that a September rate hike would go a long way toward restoring the central bank’s credibility on inflation, which has spent more than five years stubbornly above the 2% target.

As of September 10, 2026, futures markets are pricing in roughly a 70% chance of a 25-basis-point increase at the upcoming September 15-16 FOMC meeting. If it happens, the federal funds rate would move from the current 3.50%-3.75% range to 3.75%-4.00%, marking the first tightening move since 2023.

The July dissent that changed the conversation

The groundwork for this moment was laid in July, when the FOMC voted to hold rates steady at 3.50%-3.75%. That decision came with a notable asterisk: three regional Fed presidents dissented in favor of a hike.

Three-way dissents are rare. The last time that many FOMC members broke ranks on the same side was 2016.

The dissenters had a point that’s hard to argue with. PCE inflation, the Fed’s preferred gauge, has been running above 3% year-over-year. Supply chain disruptions tied to the Iran conflict have added fresh upward pressure on prices.

Aliaga’s read is straightforward: the Fed needs to act now or risk markets concluding that the 2% target is more aspiration than commitment.

What’s driving JPMorgan’s call

JPMorgan Wealth Management analysts have shifted their forecasts to align with the September hike expectation, citing two primary catalysts. The first is the persistent inflation data, which has refused to cooperate with the Fed’s timeline. The second is the supply-chain disruptions from geopolitical tensions in the Middle East, which have pushed input costs higher across multiple sectors.

The August CPI report, expected ahead of the September meeting, will be closely watched as a final data point before the decision.

There’s also the leadership dynamic under Chair Kevin Warsh to consider. Warsh has faced questions about whether the Fed’s dovish posture through much of 2025 and early 2026 allowed inflation to re-entrench. A September hike would serve as a statement that the current leadership is willing to endure short-term economic pain to preserve long-term credibility.

Market implications across asset classes

A rate hike, even a widely anticipated one, would ripple across multiple markets. Fixed-income investors have already begun repositioning, with Treasury yields reflecting the higher probability of tightening. The two-year yield, which is most sensitive to near-term policy expectations, has been drifting upward in recent weeks.

The key question for equity investors is whether September represents a single corrective move or the opening act of something larger. Aliaga’s framing suggests it’s more about re-establishing credibility than launching a prolonged hiking campaign.

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