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Learn moreThe Federal Reserve's September policy meeting kicked off Tuesday morning, and markets overwhelmingly expect the Fed to raise interest rates by 25 basis points on Wednesday amid persistently high inflation.
Such a move would mark the Fed's first increase in the fed funds rate since 2023, when the Jerome Powell-led central bank concluded its post-pandemic hiking campaign. However, inflation has now remained above the Fed's 2% target for more than five years, with the war in the Middle East serving as the latest driver of higher prices.
As Fed Chairman Kevin Warsh said in his Jackson Hole Symposium speech in August, "We have work to do."
Still, a hold isn't entirely off the table — even as traders price in a 92% chance of a Fed rate hike, according to CME Group's FedWatch tool. Federal Reserve Chairman Kevin Warsh has been adamant about not providing markets with forward guidance on interest rate decisions, preferring that officials have a "good family fight" over the data at FOMC meetings.
In addition to the intrigue over whether the Fed will hike rates, markets will closely scrutinize the Fed's Summary of Economic Projections, the so-called dot plot, for clues about monetary policy in the next few years.
LIVE1 updateSeptember Fed meeting begins, as expected
The Federal Open Market Committee's September meeting kicked off on Tuesday on schedule.
"The FOMC meeting began at 10:30 AM ET as scheduled," a Federal Reserve spokesperson said.
On Wednesday, at 2 p.m. ET, the Fed will issue its monetary policy statement and interest rate decision. As of Tuesday, bond traders were pricing in a roughly 92.7% chance that the Fed will hike interest rates at the end of its meeting, according to CME Group's FedWatch.