Recent Fed communications and the September 16 unanimous 25-basis-point hike to the 3.75–4.00% target range have anchored trader expectations for a measured tightening path through year-end, with inflation remaining elevated at 3.4–3.7% on core PCE and CPI readings through August. Resilient economic growth, solid labor market conditions with unemployment near 4.1%, and upward revisions to the dot plot—showing 16 of 18 officials expecting at least one additional increase by December—have elevated the implied probability of sequences featuring two hikes amid one pause. Market-implied odds reflect this hawkish tilt, reinforced by two-year Treasury yields near 4.7% and CME FedWatch pricing of roughly 70–90% odds for further moves at the October 28 and December 9 meetings. Upcoming nonfarm payrolls and inflation releases will test whether momentum persists or allows for a pause.
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