Federal Reserve Expected to Raise Interest Rates in September
The Federal Reserve is expected to raise its benchmark interest rate by a quarter percentage point at its meeting on Wednesday, marking the first increase since July 2023. Traders are placing over 90% odds of this hike according to CME Group's FedWatch tool, which would set the federal funds rate target range between 3.75% and 4%. This decision follows a period where rates were cut six times totaling 175 basis points from July 2023 through early 2026. The shift toward tightening is attributed to recent inflation readings, a strong labor market, and rising crude oil prices above $100 per barrel due to the Iran conflict. Fed Chair Kevin Warsh's remarks at Jackson Hole contributed to this hawkish turn. The path leading up to Wednesday’s decision shows increasing support for rate hikes within the FOMC over several months. Morgan Stanley economists now expect two hikes in 2026, warning that skipping a move would jeopardize Fed credibility. The meeting will also release updated economic projections and a new rate dot plot extending through 2029.
Tickers: $MS
Topics: Federal Reserve FedWatch tool inflation interest rates Jackson Hole symposium