Fed Rate Hike Expected Amid August Inflation Surprise

Commerzbank's Antje Praefcke expects the FOMC to raise the federal funds rate by 25 basis points after stronger-than-expected August inflation figures. The decision is widely expected, and a hike is largely priced in.

A surprise pause would hurt the Fed's credibility and the US Dollar, while a rate increase will help alleviate doubts about the Fed's commitment to price stability.

However, if the dot plots suggest further hikes are likely, the market may see this as confirmation of higher benchmark interest rates, causing the dollar to gain ground.