FOMC Convenes Amid Interest Rate Uncertainty Ahead of Strong US Jobs Data

The Federal Open Market Committee (FOMC) will convene on September 15-16 to discuss interest rates, following a stronger-than-expected US employment report. The August jobs data showed 162,000 new positions added, far surpassing the anticipated 55,000.

With unemployment remaining at 4.1%, markets are now divided on whether the Fed will hike or hold interest rates steady. According to CME FedWatch Tool, there's a 58.4% probability of a 25-basis-point rate increase during the meeting, with odds of keeping rates unchanged at 41.6%. A hike would move the target range from 3.50%-3.75% to 3.75%-4.00%.

The upcoming CPI inflation data on September 11 will also play a crucial role in the FOMC's decision, as it may influence policymakers' views on interest rates. Additionally, wages have picked up slightly, with average hourly earnings increasing by 3.1% from last year. A robust labor market often leads to a more restrictive policy.