Fed Rate Hike Odds Skyrocket to 87% Ahead of September Meeting

Markets are now pricing in an extremely high chance of a Fed rate hike at the upcoming meeting on September 15-16, with odds standing at 87%. This shift comes after August's Consumer Price Index (CPI) report showed inflation remaining above the Federal Reserve's 2% target. Economists had initially expected rates to remain unchanged due to easing inflation and the approaching US midterm elections.

However, the latest CPI data revealed stronger core prices, with yearly inflation rising 3.4% and core CPI at 2.4%. This has led many economists to reassess their predictions, with nearly all now expecting a 25-basis-point increase in rates. The Fed currently holds its target rate between 3.50%-3.75%.

Chief economist Heather Long stated that a September hike is 'almost locked in', citing the growing risk of inflation remaining entrenched. This would mark the first Fed rate increase in three years and has significant implications for the broader market, including cryptocurrencies like Bitcoin and Ethereum.