September Fed decision now a coin flip as rate hike odds increase
Market expectations for a September Federal Reserve interest rate hike have shifted to a coin flip following comments from Fed officials regarding inflation. Traders are now weighing the impact of cooling inflation data against the central bank's commitment to its 2% target.
Why it matters
Interest rate decisions significantly influence global financial markets, borrowing costs, and economic growth trajectories.
Kevin Warsh's keynote speech at the central bank's annual symposium in Jackson Hole, Wyo. has altered investors' outlook for an interest rate hike in September after the Fed chairman said he was committed to fighting inflation.
Traders on prediction market platform Kalshi now believe there are 48% odds that the Fed will hike rates by 25 basis points. Before Warsh's speech, odds that the central bank would maintain the status quo in September were nearly 70%. '
Traders of fed funds futures now see a nearly 56% chance of a quarter-point hike in September, per the CME's FedWatch tool . And on Polymarket , speculators indicated 49% odds that the Fed raises rates.
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