Fed will have to step up the pace of tightening next year

The lack of a sustained acceleration in wage growth suggests the Fed will be in no rush to hike rates again early next year. The stagnation in productivity, however, means that even the current level of hourly wage growth could soon feed through into higher price inflation. Along with the prospect of a large fiscal stimulus, we think this will force the Fed to accelerate the pace of tightening next year.