US Federal Reserve Set to Raise Interest Rates Amid Ongoing Inflation Fears

The US Federal Reserve is set to announce its interest rate decision on Wednesday, with markets expecting a hike to combat surging inflation. The Fed's Federal Open Market Committee has been meeting since Tuesday and will make its announcement at 2:00 pm (1800 GMT).

Fed Chair Kevin Warsh will address a press conference after the announcement.

The US economy has been dealing with higher-than-target inflation, fueled by President Donald Trump's war on Iran, his signature tariff policies, and the ongoing AI boom. The Fed has held rates steady since January, but a quarter of the committee's voting members dissented from this decision at its last meeting in July.

The latest consumer inflation index came in at 3.4 percent in August, unchanged from the previous month but still above the Fed's two-percent target. This data fueled market expectations of a rate hike, with investors giving it a probability of over 92 percent according to CME's FedWatch tool.