Fed Traders Split on September Rate Hike Odds
The upcoming Federal Reserve meeting in September is expected to be a closely watched event, with traders divided on whether or not the Fed will raise interest rates. According to the CME FedWatch Tool, there's a 45% probability that the Fed will hike rates by 25 basis points at its September 16-17 FOMC meeting.
The current federal funds rate target sits at 3.50-3.75%, where it has remained since July 2026. The recent inflation reading of 4.2% in May 2026 sent rate hike expectations climbing, but subsequent data, including a disappointing July jobs report, pulled them back.
The Fed is facing a dilemma: hiking rates to fight inflation and risk tipping an already cooling economy into something worse, or holding steady and risking letting inflation expectations become entrenched. The September FOMC meeting will include updated economic projections and a press conference from Fed Chair Jerome Powell.