Fed Raises Likelihood of 0.25% Rate Hike in September

The Federal Reserve is increasingly likely to raise the benchmark interest rate by 0.25 percentage points at the September FOMC meeting. Gareth Soloway, chief market strategist at investment analysis firm Verified Investing, stated that inflationary pressures remain strong, and it is rare for the Fed to disappoint the market when there is a 75% or higher probability of a rate hike. He pointed out that with oil prices exceeding $100 per barrel and diesel prices surpassing $6, supply chain costs could be passed on to consumer prices. Soloway believes that a rate hike by the Fed could reduce downward pressure on long-term Treasury yields. He explained that if the Fed shows a commitment to controlling inflation, demand for U.S. Treasuries could recover. Additionally, he kept open the possibility of a total increase of 0.50 percentage points by the end of the year, mentioning that a 0.25 percentage point hike in September is likely. He warned that failing to raise rates could increase concerns about U.S. debt and the independence of the Fed.

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