Oil Price Surge Spurs Rate Hike Expectations at Fed Meeting

The Federal Reserve's meeting this week is expected to be pivotal in determining whether interest rates will increase. With oil prices rising above $100 a barrel, markets are pricing in at least one rate hike by September.

Last week, futures markets put the chance of a 0.25 percentage point increase at under 10 percent, but that probability rose to 36 percent by Friday. Investors now see multiple rate hikes over the next nine months as increasingly likely.

The shift in focus reflects the sharp jump in oil prices. Oil markets have shown volatility since the war began in late February, and traders initially viewed the inflation impact as temporary. However, once oil moved above $100, that view weakened rapidly.