Fed Projected to Raise Interest Rates by 25 bps as Jobs Report Sparks Inflation Concerns

The Federal Reserve is poised to raise interest rates by 25 basis points this month following a stronger-than-expected jobs report. The August jobs report added 162,000 new positions, more than triple the expected 53,000.

Fed Governor Michael Barr stated that unless inflation shows signs of easing, he and the Fed would back a rate hike. Currently, the federal funds rate target range is between 3.50% to 3.75%, while benchmark 30-year fixed mortgage rates average approximately 6.66% to 6.68%.

The jobs report has sparked concerns over potential inflation, with Fed Chair Kevin Warsh stating that policymakers would 'have work to do' if they lacked confidence in inflation returning to the central bank's 2% target. Amid these worries, yields jumped again Tuesday, with the benchmark 10-year note hitting its highest level since January 2025.