Federal Reserve officials have suggested that another interest rate hike may be necessary due to persistent inflation levels remaining above the central bank’s 2% target. The Consumer Price Index (CPI) reached 3.4% year-over-year in August, while the Personal Consumption Expenditures (PCE) index is projected at 3.97% in September. The Fed already raised rates by 25 basis points in September to a range of 3.75%–4.00%, marking its first hike since July 2023. Market pricing for a single rate hike in 2026 now stands at 7.5%, down from 8% the previous day, with the probability for two rate hikes declining from 56% to 49%. Upcoming inflation data and statements from Fed Chair Jerome Powell will be critical in shaping market expectations regarding further monetary tightening.
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