Fed Odds Soar Above 85% for September Rate Hike

The Federal Reserve is increasingly likely to raise interest rates at its September meeting, with market-implied odds rising above 85% after stronger-than-expected core inflation data. The latest U.S. inflation data showed a 0.3% month-over-month increase in core CPI in August, exceeding economists' forecasts.

The Fed has been under pressure to raise interest rates due to persistent price pressures, higher oil prices, strong economic growth, and rising consumer inflation expectations. Inflation risks remain elevated, driven by these factors.

Some economists believe that a rate hike is not just about the level of interest rates, but also about the credibility of Fed Chair Kevin Warsh. The market is now clearly expecting a rate hike, and failing to deliver one could weaken Warsh's position.