Futures Market Now Sees High Probability of Fed Rate Hike Next Week
The probability of a Federal Reserve interest rate hike at the upcoming September 16 FOMC meeting has surged to approximately 88%, according to federal funds futures data from CME FedWatch. This is up sharply from 59% just one week ago and nearly double the 48% chance recorded a month earlier. The shift in expectations follows two recent inflation reports showing persistent price increases, with both producer and consumer prices rising more than expected. The Bureau of Labor Statistics reported that wholesale prices rose by 0.4% monthly and 5.4% annually in August, while the Consumer Price Index increased by 0.3% (excluding food and energy) and 3.3% year-over-year—well above the Fed’s 2% target. These data points have reinforced concerns that inflation remains stubbornly high, increasing pressure on the Federal Reserve to act. Analysts suggest that new Chair Kevin Warsh may face strong internal support for a rate hike from FOMC members who previously dissented at July's meeting by voting in favor of an increase. Historically, Fed Chairs have not been outvoted on monetary policy decisions, and if Warsh resists the consensus, it could lead to significant political consequences.
Topics: federal funds futures Federal Reserve inflation interest rate hike