The Federal Reserve is expected to raise its benchmark interest rate by a quarter percentage point at its meeting Wednesday, which would mark the first increase since July 2023, according to CNBC. CME Group's FedWatch tool showed traders placing odds above 90% on a hike, an outcome that would set the federal funds rate target range at 3.75%–4%.
That would follow a period in which the FOMC reduced rates on six separate occasions totaling 175 basis points from July 2023 through early 2026, according to CNBC. Since then, a string of discouraging inflation readings, a firm labor market, and crude oil prices rising back above $100 a barrel — driven by the conflict involving Iran — have shifted the calculus toward tightening.
Fed Chair Kevin Warsh's remarks at the Fed's annual Jackson Hole symposium helped accelerate that shift, according to CNBC. As recently as a month ago, futures markets put the probability of a hike at only 36%.
The path to Wednesday's expected decision reflects a committee that had been moving in a hawkish direction for months. At the June meeting — Fed Chair Kevin Warsh's first — the committee voted 12–0 to hold rates steady, but the Fed released projections showing nine of 18 officials favored at least one rate hike before year-end. Consumer prices had risen 4.2% year-over-year in May, a three-year high. Warsh said at the time that the Fed's commitment to bringing down inflation was "strong, unanimous, and unambiguous."
Minutes from the July meeting, when the committee held rates steady on a fractured 9–3 vote, showed hawkish sentiment extended beyond the three dissenting regional bank presidents who had pushed for an immediate increase. The minutes indicated that "some policy firming would likely be warranted" if inflation remained persistent, driven by factors including AI-fueled demand, Middle East energy disruptions, or tariff pass-through.
#cnbc #hike #rates #inflation
That would follow a period in which the FOMC reduced rates on six separate occasions totaling 175 basis points from July 2023 through early 2026, according to CNBC. Since then, a string of discouraging inflation readings, a firm labor market, and crude oil prices rising back above $100 a barrel — driven by the conflict involving Iran — have shifted the calculus toward tightening.
Fed Chair Kevin Warsh's remarks at the Fed's annual Jackson Hole symposium helped accelerate that shift, according to CNBC. As recently as a month ago, futures markets put the probability of a hike at only 36%.
The path to Wednesday's expected decision reflects a committee that had been moving in a hawkish direction for months. At the June meeting — Fed Chair Kevin Warsh's first — the committee voted 12–0 to hold rates steady, but the Fed released projections showing nine of 18 officials favored at least one rate hike before year-end. Consumer prices had risen 4.2% year-over-year in May, a three-year high. Warsh said at the time that the Fed's commitment to bringing down inflation was "strong, unanimous, and unambiguous."
Minutes from the July meeting, when the committee held rates steady on a fractured 9–3 vote, showed hawkish sentiment extended beyond the three dissenting regional bank presidents who had pushed for an immediate increase. The minutes indicated that "some policy firming would likely be warranted" if inflation remained persistent, driven by factors including AI-fueled demand, Middle East energy disruptions, or tariff pass-through.
#cnbc #hike #rates #inflation
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