Perspective on Federal Announcement by Ashish Rajodiya, Head of Commodities, PL Capital Group
Below the Perspective on Federal Announcement by Ashish Rajodiya, Head of Commodities, PL Capital Group
Fed Set to Hike Rates for First Time Since 2023 as Inflation Runs Hot
The Federal Reserve is widely expected to raise interest rates by 25 basis points to 3.75-4.00% at today's policy meeting, its first hike since 2023, with markets pricing in a probability of around 90-93% for the move via the CME FedWatch tool. The decision follows last week's hotter-than-expected August inflation data, with headline CPI rising 0.4% month-on-month and holding at 3.4% annually, while core inflation also came in a touch above forecast. The move has already pushed the 10-year US Treasury yield to nearly 5%, its highest level in years, as markets adjust to a tighter policy path. With the hike itself now almost fully priced in, the bigger market driver today will be the Fed's forward guidance — specifically the updated dot plot and Chair Warsh's press conference — which will indicate whether further hikes are likely before the end of the year. A hawkish signal on additional tightening could extend pressure across rate-sensitive assets, while any hint of a pause after this move could offer some relief.
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