While the financial markets seem to be betting on a very extended pause in the US Federal Reserve’s multiyear tightening cycle, Franklin Templeton Fixed Income Group Chief Investment Officer Sonal Desai has another idea. Here, she makes the case that interest-rate hikes may still be on the table this year.

The US Federal Reserve (Fed) performed a remarkable 180-degree turn between December and January. On December 19, the Wall Street Journal’s opinion page was titled “Powell to Markets: Take That,” with the subtitle “The Fed says more rate increases are coming, so get used to it.” Just a month later, the same page was titled “The Fed Apologizes,” with the subtitle “Powell continues his rehabilitation tour, and the markets applaud.”

Fed Chair Jay Powell carries the torch of the “Fed put,” in other words, like Yellen, Bernanke and Greenspan before him. The stock market swoons, the Fed turns dovish.

This biting criticism contains more than a kernel of truth. But it does not mean that the Fed won’t hike again.

The Fed decided to pause because it thinks it prudent, and because it can. Inflation remains under control and—argues the Fed—so does financial stability. Therefore, slowing or even halting policy normalization carries no risks—and the Fed can afford to wait.

I agree that financial risks are broadly under control; but this points to more rate hikes, not rate cuts, in my view. Hear me out.

US consumers are in stronger financial health than previously thought. Most importantly, our research shows that they are much less vulnerable to stock market fluctuations than they used to be.

THE FINANCIAL HEALTH OF THE CONSUMER IS MUCH STRONGER THAN ORIGINALLY THOUGHT. THE US SAVINGS RATE REMAINS HIGH.