Traders price 95% chance of quarter point Fed hike as meeting nears
Traders have priced in as much as a 95% chance of a quarter point increase when the Federal Reserve meets on 15 and 16 September.
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Markets have already priced in a rate rise well before policymakers gather. Traders are pricing a 95% chance of a quarter point hike at the Federal Open Market Committee's meeting on 15 and 16 September, this outlet reported earlier, with estimates of the size of any move varying depending on who is counting.
Oil prices have added to the inflation pressure behind that pricing. Brent crude jumped 2.8% to $107.55 a barrel after Saudi Arabia shut a key pipeline following a drone attack, this outlet reported earlier, and hotter August inflation data has since pushed traders further toward expecting an increase.
The decision carries a political backdrop. President Trump has pressed Federal Reserve Chair Kevin Warsh to cut rates, this outlet reported earlier, though Kevin Hassett has said Trump will respect whatever Warsh decides.
With odds already running as high as 95% before the meeting, a hike in line with that pricing would confirm what markets have assumed rather than change it. The bigger risk for anyone positioned around the decision is a surprise: a hold, or a move larger or smaller than a quarter point, would land against expectations that are already close to certainty.