Markets price better-than-even odds of a Fed hike next week

Odds of a rate hike at the September FOMC meeting surpassed 50%, a shift that followed Fed Chair Kevin Warsh’s keynote at the Jackson Hole symposium¹. CNBC reported traders pricing about a 60% chance of a hike at the central bank’s meeting next week⁷.

The last data point before the decision is the August CPI print, which lands on Friday, September 11, ahead of the September 15 to 16 FOMC². Warsh has flagged PCE inflation at 3.7% over twelve months and 4.1% annualised over six³.

Why it matters to investors

The committee is split. Cleveland Fed President Beth Hammack has taken a hawkish stance, voted for a rate hike and argued from her district’s conditions that it is time to act⁵. Governor Christopher Waller said ‘we are finally seeing some signs of disinflation,’ a comment that leaned toward not hiking, and has tied his position to the incoming numbers rather than to a preset path⁶.

One analysis called this the most divided Fed in half a century¹⁰. Semafor argued Warsh has plenty of excuses to delay, has to guard a hawkish flank led by Hammack, and likely has enough allies to avoid a hike⁹.

Forecasters disagree as well. A Reuters poll had the Fed holding rates steady through the rest of 2026, though a rising number of analysts see at least one hike⁴, while UBS expects two increases before the end of the year⁸.

The chair’s own words have moved the odds. Pricing shifted after the Jackson Hole keynote¹, and Warsh’s description of inflation as running well above target on both a twelve-month and a six-month basis is what put a September move on the table³.

What to watch

Friday’s inflation print is the swing factor². The distance between a hold and a hike is now narrow enough that one release can settle it^1,7.

Communication is the second variable. Economists’ conviction in their own forecasts has waned considerably since Warsh adopted a policy of providing little guidance⁴, which raises the market cost of any surprise at the meeting¹⁰.

The dissent count is the third⁵. It will show how far the hawkish bloc has grown, and whether the allies Semafor counted on the chair’s side are still there when the vote is taken^8,9.