Fed Hike Looms as Markets Anticipate Wednesday's Interest Rate Decision

The upcoming Federal Reserve policy announcement on Wednesday will be closely watched by investors and traders. According to Kathleen Brooks, research director at XTB, this is the most highly anticipated meeting of Fed chair Kevin Warsh's tenure so far.

Brooks notes that the market is fairly certain the Fed will hike rates, with an 86% probability priced in by the Fed Fund Futures market.

The decision to hike or not will set the tone for the rest of the week and the month, as Brooks warns that a failure to hike could lead to another bond market sell off, while a rate hike would show the market that the Fed is serious about inflation.