US Fed Expected to Raise Interest Rates Amid High Inflation

The US Federal Reserve is set to announce its decision on interest rates for the world's largest economy, with markets betting on a hike to tackle surging inflation.

The Fed's Federal Open Market Committee will make its announcement after a two-day meeting on Wednesday at 2:00 pm (1800 GMT), following years of higher-than-target inflation.

Policymakers have held rates steady since January, but with consumer inflation index data showing no change in August and still well above the Fed's long-term target of 2%, markets are predicting a rate hike.

The CME's FedWatch tool gives it over a 92% probability, according to chief economist Diane Swonk, who says 'inflation is still well above the two percent target...it has spread across the economy and is becoming embedded in consumer and firm behavior -- exactly what the Fed must prevent.'

A rate hike would be the first since 2023, when the central bank was battling post-pandemic inflation, and could anger US President Donald Trump, who has launched a campaign to pressure the independent central bank to lower rates.