Fed Rate Hike Odds Rise to 50% for September
Fed rate cut expectations are shifting: markets now price a 50% chance of a hike in September, while the probability of any cut before year-end remains low. CPI data and emergency meeting probabilities are key signals.
Key takeaways
- 01
Fed rate cut expectations are shifting: markets now price a 50% chance of a hike in September, while the probability of any cut before year-end remains low.
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CPI data and emergency meeting probabilities are key signals.
- 03
The Federal Reserve's September 2026 meeting is drawing significant attention as markets price in a 50% chance of a 25bps rate hike (KXFEDDECISION-26SEP, Y:50¢) and only 3% for a cut.
Full analysis
The Federal Reserve's September 2026 meeting is drawing significant attention as markets price in a 50% chance of a 25bps rate hike (KXFEDDECISION-26SEP, Y:50¢) and only 3% for a cut. The KXEMERCUTS-26-T0 contract (92¢) indicates a 92% probability of zero emergency cuts, reinforcing the view that the Fed is on hold. Traders are also watching CPI data: the KXCPIYOY-26JUL-T3.4 contract (26¢) suggests a 26% chance inflation will exceed 3.4% year-over-year, while KXCPIYOY-26JUL-T3.5 (6¢) shows a 6% chance of above 3.5%. The rate cut count market (KXRATECUTCOUNT-26DEC) has the 0 cuts contract at 82¢, meaning the market expects the Fed to hold rates through year-end. This is a pivotal moment for rate-sensitive assets like bonds (TLT +0.1%) and equities (QQQ -1.5%). Traders should monitor the Fed's communication and upcoming CPI releases for any shift in the probability of a hike or cut.
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