big number
82.2%. Those are the odds priced in by traders for the Federal Reserve raising interest rates by December, according to CME Group’s FedWatch tool. The probability of a rate hike steadily increases starting next month at 29.9%, then jumps to 64.9% in September and 71.6% in October.
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will the federal reserve hike interest rates?
Central bank officials have increasingly leaned toward the possibility of raising interest rates: Nine of the Federal Open Market Committee’s 18 members—newly appointed Fed Chair Kevin Warsh refrained from making any projections—indicated earlier this month they favored at least one interest rate hike this year. In the FOMC’s April meeting, a “majority” of officials said a rate hike may be appropriate if inflation persisted above the central bank’s 2% goal, and a majority also stated there was an “increased risk” that inflation took longer to return below the goal’s threshold than previously expected.
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key background
Inflation has soared in recent months as oil and gas prices have pressured consumer prices during the Iran war. The Consumer Price Index similarly hit a three-year high in May, showing consumer costs increased 4.2% annually as gas prices surged nearly 59% year-over-year, the most of any item tracked by the Bureau of Labor Statistics.
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further reading
ForbesInflation Hit Highest Rate In 3 Years In MayBy Ty RoushForbesFed Holds Interest Rates Unchanged In Kevin Warsh’s First Meeting—But Higher Rates Are ExpectedBy Ty Roush