Copper Plunges as Inflation Bites and Rate Hike Odds Surge

Copper prices have plummeted in recent days after a hotter-than-expected US inflation print boosted bets on Federal Reserve rate hikes. The metal, which had surged past $14,500 per metric ton on the London Metal Exchange earlier this month, is now sliding due to rising interest rates and a stronger dollar.

The September 11 CPI data showed headline inflation rose 0.4% month-over-month and 3.4% year-over-year, while core CPI climbed 0.3% on the month. The market-implied probability of a Federal Reserve rate hike at the September 15-16 FOMC meeting has jumped to roughly 85-88%.

The surge in interest rates is making dollar-denominated commodities more expensive for international buyers and raising borrowing costs for industries that consume copper, such as construction and manufacturing. This has created a headwind for copper prices throughout the year, with markets pricing in multiple rate hikes across 2026.

The September FOMC meeting will be closely watched to see what guidance the Fed signals about its future policy path beyond this month's hike. If policymakers indicate that more hikes are coming, it could add downward pressure on copper prices, particularly if a stronger dollar continues to strengthen.