Fed becomes the focus with rate hike expectations ahead of the upcoming FOMC meeting
Financial markets are pricing in a 25 basis point rate hike by the US Federal Reserve at its meeting scheduled for September 15-16.
While the US Federal Reserve is expected to implement a 25 basis point rate hike at next week's Federal Open Market Committee meeting, statements by Chair Kevin Warsh and strong macroeconomic data are reinforcing expectations in the markets.
Market Expectations Ahead of the Meeting
As markets seek direction ahead of the Fed's Federal Open Market Committee meeting to be held on September 15-16, a 25 basis point rate hike by the Bank on Wednesday is being priced in. Along with the decision, signals in the policy statement and the press conference are keenly awaited.
Chair Warsh's Inflation Messages
Fed Chair Kevin Warsh, in his speech at Jackson Hole, emphasized price stability by signaling that additional steps in monetary policy might be needed if inflation fails to decline to the targeted level.
Disagreements Within the Committee
At the Fed, which kept the policy rate steady in the 3.50-3.75 percent range in July, some presidents voted in favor of a rate hike, while statements from other members reflected differing views within the committee.
August Macroeconomic Data
In the US, nonfarm payrolls increased by 162 thousand in August, and the unemployment rate was 4.1 percent. The Producer Price Index increased by 5.4 percent annually, and the Consumer Price Index increased by 3.4 percent annually.