CME FedWatch shows a 55% chance of a 25-basis-point hike next month as inflation estimates signal reacceleration.
The Federal Reserve’s August inflation forecast suggests price pressures may reaccelerate after a softer June, heightening uncertainty ahead of the September FOMC meeting. Markets now assign a 55% probability to a 25-basis-point rate hike, per CME Group’s FedWatch tool, up from near-even odds earlier this month.
Inflation has cooled from 2022 peaks but remains above the Fed’s 2% target, complicating policy decisions. The Cleveland Fed’s Nowcasting model, which estimates upcoming inflation prints, has fueled speculation that recent disinflation trends may stall. July’s meeting saw three dissenters push for tighter policy, underscoring internal divisions.
Traders are closely watching upcoming employment and inflation data, which could tip the balance toward a hike or hold. The Fed’s next move hinges on whether price pressures persist or ease further in the coming weeks.