Markets price Fed hike as oil exceeds $100
Arabian Post Staff -Dubai Wall Street is preparing for the Federal Reserve to raise interest rates this week for the first time since July 2023, after another surge in oil prices and stubborn inflation pushed market expectations decisively towards tighter policy. Interest-rate futures on Monday assigned roughly a 90% probability to a quarter-point increase at the Federal Open Market Committee’s…
Wall Street expects the Federal Reserve to raise interest rates this week for the first time since July 2023, following a surge in oil prices and persistent inflation. Interest-rate futures suggest a 90% chance of a quarter-point increase at the September 15-16 meeting, driving the federal funds target range to 3.75%-4.00%. Brent crude and West Texas Intermediate traded above $107 and $102 respectively, reflecting heightened concerns over potential supply disruptions and the impact on inflation.
US Treasury yields briefly reached 5%, the highest levels in years, as investors priced in tighter monetary policy. Major US stock indices weakened, with technology shares particularly vulnerable due to their valuation linked to future profits. Inflation data for August indicated the consumer price index rose 3.4% year-over-year, reinforcing doubts about the Fed's ability to maintain its 2% target without hurting growth.
Saudi Arabia's temporary shutdown of a key oil pipeline added to market uncertainty over energy supplies. Investors are divided on whether the rate hike will help curb inflation or cause unnecessary damage to sensitive sectors. The Fed's communication on Wednesday could be as crucial as the policy decision itself, with Chair Kevin Warsh's remarks closely watched for clues on the extent of the tightening cycle.
Written by urgent.news from Arabian Post's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
