Fed Set to Hike Rates Amid Surging US Inflation

The US Federal Reserve is set to make its decision on interest rates for the world's largest economy on September 16. Markets are betting that the central bank will hike rates to tackle surging inflation, which has been above target since years ago.

After holding rates steady since January, the Fed may need to intervene if inflation does not meaningfully slow down. The latest data shows consumer inflation at 3.4 per cent in August, still well above the two-per-cent target.

Investors give a probability of more than 92 per cent that the Fed will raise rates, according to CME's FedWatch tool. Diane Swonk, chief economist at KPMG, notes that inflation is 'an about-face, but not a surprise' and has spread across the economy.