The likelihood of a Fed interest rate hike next week just got a lot higher
Traders pushed chances for a rate increase to 70% in morning action.
TL;DR
- Market pricing shows a 70% chance of a Federal Reserve interest rate hike next week.
- Increasing wholesale prices and U.S. crude oil prices surpassing $100 per barrel are contributing factors.
- There is a nearly 60% chance of another rate increase in December.
- The conflict with Iran is seen as entrenching inflation pressures.
- The producer price index rose 0.4% in August, with the annual PPI at 5.4%.
- U.S. crude oil prices increased by 4% to over $100 per barrel.
- The European Central Bank raised its interest rate by a quarter percentage point and increased its inflation forecast.
- The Fed's preferred inflation measure, the PCE price index, showed a core rate of 3.3% in July.