Kalshi Markets Predict Near-Certainty of Rate Hike in September

A recent surprise in core CPI data has led to an increase in odds of a Federal Reserve rate hike, according to Kalshi's market. The odds of a 25bps rate hike rose to 81%, a 20-point jump from the previous day, while the chances of maintaining rates remained at 19%. This shift is also reflected in CME Group's FedWatch tool, which shows markets pricing a nearly 90% chance of a rate increase at next week's Fed meeting.

Kalshi's market has now reached an all-time high, with odds of a hike before 2027 jumping as high as 89%. The surge in rate hike odds comes amid new inflation fears, including disruptions to shipping through the Strait of Hormuz and surging oil prices. These factors have further fueled expectations of an increase by the central bank.

Fed Chair Kevin Warsh has remained tight-lipped on where he sees interest rates going, but his repeated comments that the central bank's focus should be on slowing price rises has further fueled expectations of an increase. Meanwhile, President Donald Trump continues to call on the Fed to lower interest rates.