Fed Rate Hike Odds Jump to 87% as FOMC Meeting Nears

The Federal Reserve is heading toward a major policy test as markets now see an 87% chance of a rate hike at the September 15–16 meeting. The shift comes after August CPI kept inflation above the Fed’s 2% target. 

With Bitcoin near $77,256, traders are now watching how higher rates could affect the crypto market.

Economists Now See a September Fed Rate Hike

Markets have sharply shifted toward a September Fed rate hike. Nearly all economists now expect a 25-basis-point increase at the September 15–16 meeting, while rate futures put the odds at 87%, up from 72% a day earlier. The Fed currently holds its target rate at 3.50%–3.75%.

Earlier, most economists expected the Fed to keep rates unchanged because inflation was easing and the U.S. midterm elections were approaching. Only 13 of 48 economists expected a hike this month.

But hotter inflation has changed the outlook. U.S. inflation came in slightly hotter than expected, driven by stronger core prices. On a yearly basis, CPI rose 3.4%, matching expectations, while core CPI stood at 2.4%, also in line with forecasts.

Chief economist Heather Long said a September hike is now “almost locked in,” as the risk of inflation staying high continues to grow.