Recent inflation readings and resilient labor market data have shifted trader focus from rate cuts to potential hikes for the Federal Reserve. August core CPI rose 0.3% month-over-month, exceeding the 0.2% consensus, while headline CPI reached 3.4% year-over-year and the unemployment rate held at 4.1% amid stronger-than-expected payroll gains. With the policy rate steady in the 3.50%-3.75% range all year, futures markets now price roughly an 85% chance of a 25-basis-point hike at the September 15-16 FOMC meeting and further tightening by year-end. Hawkish signals from Chair Kevin Warsh, including at Jackson Hole, and supply-side pressures have reinforced this view, contrasting with many economists who still anticipate a hold through year-end amid moderating price pressures and midterm election timing. The next CPI and employment releases will provide key updates ahead of the decision.

Sep 10 2026

Fed signals data-dependent approach, keeping rate cut chances low for 2026

In early September 2026, Fed communications emphasized a cautious, data-driven policy stance, maintaining the likelihood of no rate cuts in the near term and stabilizing market expectations around a low probability of a December cut.

Sep 5 2026

US economic data shows job losses and retail sales contraction in August

December Meeting drops to 7%5%

August 2026 data revealed a 23,000 drop in nonfarm payrolls and a 0.6% contraction in retail sales, signaling economic cooling that briefly increased expectations for a December rate cut, reflected in a price drop to 7%.

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