Fed Rate Hike Odds Hit 70% Ahead of Friday CPI Report — SkimNews
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- Markets are pricing a 70% probability the Fed will raise its benchmark rate to 3.75%–4% at the Sept. 16 meeting, per CME FedWatch — the first increase since July 2023.
- Economists polled by FactSet expect August CPI rose 3.3% annually, easing from the three-year high of 4.2% in May, with core CPI projected at 2.4%.
- Fed Governor Christopher Waller said he'd back a rate hike "if inflation comes in hot," but would hold steady if CPI shows progress toward the 2% target.
- Thursday's PPI report showed producer prices rose 5.4% year-over-year in August, up from 4.8% in July, adding a separate inflationary pressure point.
- U.S. oil prices topped $100 a barrel Thursday on renewed Middle East fighting, while diesel hit an all-time high of nearly $6 a gallon, fueling inflation concerns.
- Bank of America economist Stephen Juneau said the CPI report is "unlikely to alter the message of limited inflation progress and should provide sufficient support for the Fed to hike rates."
Why it matters: A rate hike would end a more-than-three-year pause and reset borrowing costs for consumers and businesses. With nearly half of Fed policymakers already signaling support for a hike, Friday's CPI print versus the 3.3% consensus is now the decisive variable — a hot number virtually guarantees action on September 16.
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