The "oracle" who was the first to predict a September rate hike has changed his tune: the Fed may go straight to 50 basis points in December.

Note that one of the first forecasters to predict the Fed's most recent rate hike now says a bigger, 50 basis-point move could come in December. Jason Schenker, president of Prestige Economics, said he doesn't think the Fed is likely to raise rates at this month's meeting. Instead, he thinks the Fed may let the September hike "breathe" before potentially moving by a larger amount in December. "By December, if inflation hasn't been contained in a more meaningful way after the September hike, they might choose to hike by 50 basis points rather than 25 basis points, taking a bigger bite," Schenker said. Fed Chair Kevin Warsh brought the Fed into a hiking mode last month the first since 2023 in a bid to contain rising inflation. While many economists expected the hike in the weeks before the September meeting, back in June, Schenker was the first economist surveyed to predict it. Schenker writes forecasts at Prestige, which is regularly among the top-ranked currency forecasters on Bloomberg's leaderboard. The focus of recent debate among traders and economists is whether the Fed will raise rates by another 25 basis points this month or save that hike for the December meeting. The swaps market has fully priced in a 25 basis-point hike in December. As surging fuel costs drove consumer inflation above economists' expectations, the probability of an October hike in the futures market briefly rose above 50% before pulling back on Wednesday. Schenker, though, doesn't think the Fed will have enough information to act again at the October meeting, since a large portion of the data released Wednesday was collected before the Fed's September hike. "I don't think there are enough data points to give them the kind of confidence they might need," Schenker said. Meanwhile, between the October and December meetings, Fed officials will get two more employment reports and a CPI reading to inform future decisions. "It's only a six-week wait, but they'll get more data," Schenker said. "If they see that 25 basis points did nothing, then I think they might go 50." Schenker expects that a larger hike could mean a pause in further rate increases early next year, while a 25 basis-point hike in December would make another increase in the first quarter of next year "more likely."