Fed Set to Decide on Rate Hike Amid Rising Inflation Pressures

The Federal Reserve is set to convene its Federal Open Market Committee (FOMC) on September 15th and 16th to decide whether to raise its policy rate. With a 90% probability of a hike priced in by the market, investors are watching closely for signs of what's next.

The last time the Fed raised interest rates was July 2023, so this decision would mark the first hike in over three years. The outcome is expected to impact the yen exchange rate and could also provide insight into the future pace of monetary policy tightening.

Ahead of the FOMC meeting, U.S. inflation data has shown no signs of slowing down, with the Personal Consumption Expenditures (PCE) Price Index rising 3.7% year-over-year in July. The August Consumer Price Index also climbed 3.4%, keeping pressure on the Fed to act.

Tsubasa Fujiwara, a researcher at Daiwa Institute of Research, noted that if the Fed fails to hike rates now, it would be inconsistent with Chair Warsh's recent remarks.