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Federal Reserve — Banking — Economy

Fed Traders See More Than 90% Chance Of Rate Hike

Expectations have shifted sharply from a month ago, when markets saw only a 36% chance of a hike.

,   and  TIPP Staff
2 min read
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The Federal Reserve is widely expected to raise its benchmark interest rate Wednesday, marking its first increase in more than three years as persistent inflation puts pressure on policymakers.

Traders are pricing in more than a 90% probability of a quarter-point increase, which would move the federal funds target range to 3.75% to 4%, according to CME Group’s FedWatch gauge.

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Expectations have shifted sharply from a month ago, when markets saw only a 36% chance of a hike. Federal Reserve Chairman Kevin Warsh’s recent comments, stronger labor data and renewed inflation concerns have changed those expectations.

Oil prices above $100 a barrel amid the Iran conflict are adding further inflationary pressure. Morgan Stanley has also revised its forecast to two rate increases this year, according to CNBC.

The hike would be the first since July 2023. Investors will also examine the Fed’s updated economic projections, including forecasts for inflation, unemployment, GDP and interest rates through 2029.

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