Of those nine members, six forecast two hikes, while one called for three hikes. Only one member penciled in one rate cut, while Warsh declined to provide a forecast. The central bank cited inflation caused by the U.S.-Iran war as a key driver behind its stance.
Markets Continue to Price in More Rate Hikes
Rate hike odds surged higher following the meeting and have continued to grow. By year-end, the odds of at least one rate hike are at 89.4%, up from 86.% a day ago and 59.4% a week ago, according to the CME FedWatch tool. The most likely outcome is for two rate hikes at 36.6%.
Higher rates could present a headwinds for stocks. That’s because they raise borrowing costs for companies and increase the rate used to discount future cash flows to the present.
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