Fed Rate Hike Odds Soar to 87% Ahead of September Meeting
Markets have shifted significantly towards a September Federal Reserve rate hike, with economists now predicting an 87% chance of a 25-basis-point increase at the September 15-16 meeting. This is up from 72% just a day earlier, and represents a major shift in expectations. The current target rate stands at 3.50%-3.75%, and a hike would be the first in three years.
According to former Fed Vice Chair Richard Clarida, if a rate hike occurs next week, 'certainly we'll get additional ones'. This suggests a higher-for-longer rate outlook, as investors prepare for the Fed to continue fighting inflation. Markets are now pricing in at least three rate hikes through June 2027, up from two previously.
Higher interest rates typically make riskier assets less attractive, which could have an impact on Bitcoin and other cryptocurrencies. The price of Bitcoin has moved higher recently, reaching $77,500, while Ethereum climbed above $2,511.