Fed Hike Odds Surge as Oil Prices Soar

The Federal Reserve's interest rate decision is set for next Wednesday, and the odds of a hike have increased to 90% from 70%, according to swap traders.

This shift in probability comes after the release of August inflation numbers, which showed higher-than-expected core CPI. The headline inflation rate was 3.4%, as expected, while the core inflation rate was 2.4%.

However, due to rounding, it appears that monthly core inflation was actually higher than expected at 0.3% compared to the forecasted 0.2%. This has led some economists to speculate about how many rate hikes the Fed should make in the short term rather than just whether or not they should hike next week.

The oil price has surged since the last FOMC vote, with West Texas Intermediate reaching $100 in recent trading sessions. This increase in oil prices can contribute to generalized inflation and higher inflation expectations, which the Fed attempts to manage.

President Trump has called for a 'patriotic' rate cut, but Kevin Warsh, his appointee, has maintained an appearance of independence from the President. If Warsh votes to raise rates, he will demonstrate the continued independence of the Federal Reserve and risk incurring the President's ire.