Fed Rate Hike Bets Rise Amid Inflation Concerns

Investors are bracing for a possible interest rate hike at next week's Federal Reserve meeting, which could threaten a US stock market rally already vulnerable to rising bond yields.

The central bank has held rates steady in 2026 and has historically used interest rate increases to combat inflation. However, last month's speech by new Fed Chair Kevin Warsh was seen as hawkish, increasing bets that the Fed will hike rates on Wednesday.

Data showing consumer inflation picked up in August, with a hotter-than-expected 0.3% rise in the core measure of the Consumer Price Index, further solidified these expectations, with odds now at over 80% according to LSEG data.