US Banks Lead Charge for Sept Rate Hike Amid Rising Inflation Fears

A majority of top banks in the US expect the Federal Reserve to raise interest rates by 25 basis points this week. The list includes UBS, HSBC, Barclays, Citigroup, Wells Fargo, Morgan Stanley, Goldman Sachs, Bank of America, and JPMorgan Chase. This expectation is based on August's core consumer price index (CPI) rising 0.3% month-on-month against a 0.2% consensus.

At the Jackson Hole conference, John C. Bogle's successor at Vanguard warned that the Fed must be confident in underlying inflation moving to its objective clearly and at sufficient speed. With personal consumption expenditures (PCE) inflation running at 3.7% and oil prices pushing above $100 a barrel, markets have followed the banks' lead.

The CME Fedwatch tool now puts September hike odds at 87.3%, up from 61.9% at the end of August. However, Anthony Pompliano, a well-known Bitcoin advocate, disagrees and thinks the Federal Reserve should not raise interest rates.