Fed meeting live updates: Rate hike expected for the first time in three years CNBC Live Updates: Warsh and Fed Officials Are Expected to Raise Interest Rates Despite Trump's Demands The New York Times Wall Street bets o...
This is CNBC's live blog covering the Federal Reserve's rate decision and Chairman Kevin Warsh's news conference.
While it may have taken a while, Wall Street finally has warmed to the idea that the Federal Reserve likely will raise its benchmark interest rate as it seeks to slay a maddeningly persistent inflation problem.
Traders have assigned a better than 90% probability that the central bank's Federal Open Market Committee will vote to raise the overnight funds rate a quarter percentage point, putting the target range at 3.75%-4%, according to the CME Group's FedWatch gauge of futures prices.
A month ago, the odds were over 30%, as the market expected soft inflation readings and Chairman Kevin Warsh 's reluctance to commit the Fed to a hawkish policy path to keep the appetite in check for tighter monetary policy.
However, Warsh's remarks during the Fed's annual symposium in Jackson Hole, Wyoming, started to turn the tide. Another raft of discouraging inflation data along with a firming labor market helped seal the deal. A resurgence in crude oil prices back above $100 a barrel because of the Iran conflict adds to pressures on the central bank to act.
Morgan Stanley economists reflected the broader Street sentiment. In a note Monday, the firm said it had switched its forecast from no hikes this year to two, based in part on Warsh's public statements as well as the leg higher in oil prices , inflationary expansion in artificial intelligence and a broader shift toward expectations for hikes. The firm expects one this week, followed by another in December.
"Not doing so would risk loss of credibility and a potential rise in longer-term risk premia similar to the reaction after the July FOMC meeting," wrote Michael Gapen, chief U.S. economist for Morgan Stanley.
If approved, the hike would be the first since July 2023 . Since then, the FOMC has lowered rates six times for a total of 175 basis points, or 1.75 percentage points.
Investors also will be watching a slew of other indicators Wednesday, as the committee updates its Summary of Economic Projections. The document includes updated outlooks for unemployment, inflation and gross domestic product, as well as the dot-plot of individual participants' expectations for interest rates. This update of the grid for the first time will include expectations for 2029.
The Federal Open Market Committee's decision to raise rates would reinforce the Fed's credibility, said Shawn DuBravac, a chief economist at the Global Electronics Association.
Wall Street widely expects that the Fed will likely raise rates by 25 basis points. If this happens, DuBravac said the hiked rates would be "modest" on inflation, citing the move is unlikely to slowdown AI-related infrastructure demand.
"[A hike] would not necessarily mean increases at consecutive meetings, but it is a shift in policy direction," DuBravac said. "I would expect Chair Warsh to keep further hikes on the table while avoiding a commitment to a prolonged tightening cycle."
As the Fed is meeting over the fate of monetary policy, consumers are facing a one-two punch of higher oil prices and Treasury yields.
Crude prices reaccelerated in recent weeks as fighting between the U.S. and Iran has ramped back up. On top of that, the 10-year Treasury yield jumped this week to its highest in 19 years, threatening to intensify affordability challenges for consumers as borrowing costs rise.
"Consumers are under a lot of financial pressure," said Mark Zandi, chief economist at Moody's Analytics.
Reporting synthesized and verified under Nexvoro.tech editorial guidelines. Full primary records referenced via Google News US Business & Markets.
As Prime Minister enters his first parliamentary session, his administration faces a defining crisis over Palantir's sprawling £670m public sector contracts. Westminster insiders warn that deciding the fate of the US tech firm's NHS data agreements requires an immediate, high-stakes executive choice.
Major US television networks and print publications have suspended pooled coverage of President Donald Trump following the exclusion of CNN, Politico, and MS NOW. The affected media organisations have filed a federal lawsuit against the administration, while the White House defends its actions and launches an independent streaming initiative.
Once confident about expanding their Senate majority, Republican strategists are now scrambling to protect traditional strongholds as economic pressures mount across the Midwest. President Donald Trump's economic agenda faces intense scrutiny from voters, altering the trajectory of key legislative races.
