🇺🇸 NOW: The market is pricing an 86.7% chance the Fed delivers a 25bps rate hike at Wednesday's meeting, per CME FedWatch.

What happened

According to CME FedWatch, traders currently believe there is an 86.7% chance that the Federal Reserve will raise its key interest rate at its meeting on Wednesday.

Confirmed

Global impact / market context

A rate hike makes borrowing more expensive, which can slow spending by companies and consumers. This may reduce profits for businesses and potentially lower stock prices, especially for companies that rely heavily on borrowed money to grow.

Analyst inference

This expectation is based on current futures trading, which reflects investor bets on future interest rates. The high probability suggests the market has already largely accepted the hike, meaning prices may have partly adjusted ahead of the official announcement.

Analyst inference

What to watch

1. The actual decision announced by the Federal Reserve after Wednesday's meeting will confirm whether the rate increase happens as the market currently expects. Confirmed
2. Investors could watch how stock prices react after the announcement. If the hike is already priced in, prices may stay steady, but any surprise in the Fed's statement could cause sharp movement. Proposed
3. Future rate decisions may depend on economic data released in coming weeks. If inflation stays high, further hikes might follow, which could keep borrowing costs elevated and pressure company earnings. Analyst inference

Affected assets

• NOW — ChangeNOW
• CME — Commodity Market Exchange

Evidence

• x.com