US Fed Rate Hike Chances Rise Amid Strong Jobs Data and Trump Administration Pressure

The US Federal Reserve's (Fed) next move on interest rates is shrouded in uncertainty, with markets awaiting key data points before making a call. Fed funds futures indicate a greater-than-60% chance of a rate hike at the September 15-16 meeting, up from around 33% just weeks ago. Strong August payroll numbers have increased pressure on the Fed to raise rates, despite officials in the Trump administration urging a pause.

The strong jobs data has raised the odds of a rate hike, with payrolls rising by 162,000 in August and July's gain revised upward by 21,000. However, some contrarian voices argue that inflationary pressure is mainly due to the oil price surge caused by the Iran war.

The Trump administration, including President Trump, Vice President JD Vance, and Treasury Secretary Scott Bessent, has urged the Fed to stop or reverse rate hikes in the September meeting. Bessent noted that the Fed usually holds off on raising rates during a supply shock, until secondary or tertiary inflationary effects show up.

With the next FOMC meeting set for next week, markets are still waiting for clarity on the Fed's move. The uncertainty is due in part to the upcoming US CPI data for August, which will be key to the Fed's final call. New Fed Chair Kevin Warsh has repeatedly made it clear that markets should not expect forward guidance from the Fed.