Fed hike odds top 66% after Warsh hardens inflation stance
What's next: The Sept. 11 CPI report could decide whether the Fed raises rates at its Sept. 15-16 meeting.
Markets sharply repriced expectations for US interest rates after Federal Reserve Chair Kevin Warsh warned that underlying inflation has not improved enough to ensure a return to the Fed’s 2% goal. Futures markets lifted the implied chance of a rate increase at the Sept. 15-16 policy meeting to 66.1%, up from roughly 35% before Warsh’s Jackson Hole speech, according to CME Group’s FedWatch. Analysts at Barclays and Societe Generale now see a quarter-point increase as more likely, though some economists argue cooler inflation and softer hiring still make a move this year unlikely. Treasury Secretary Scott Bessent also pushed back, saying core inflation remains restrained.