Fed Rate Hike Expected This Week Amid Inflation Fears
The Federal Reserve is expected to raise interest rates this week, a shift driven by stronger-than-expected inflation readings and rising oil prices. According to Reuters, Goldman Sachs ($GS), JPMorgan ($JPM), HSBC, and Deutsche Bank are now forecasting a quarter-point increase at the September 15-16 meeting.
The institutions are aligned on this rate hike, with several seeing rates staying higher for longer as the Fed pursues its 2% inflation target. Market odds of a hike this week stood at roughly 88% to 89%, compared with 67% to 70% before last week's inflation data.
August inflation data came in hotter than anticipated, with core prices notching their biggest monthly jump in four months. Crude oil crossed $100 a barrel as hostilities in the Middle East intensified, stoking fears that inflationary pressures would prove difficult to shake.